Correlation Between IQ MacKay and IndexIQ Active
Can any of the company-specific risk be diversified away by investing in both IQ MacKay and IndexIQ Active at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IQ MacKay and IndexIQ Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IQ MacKay Municipal and IndexIQ Active ETF, you can compare the effects of market volatilities on IQ MacKay and IndexIQ Active and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IQ MacKay with a short position of IndexIQ Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ MacKay and IndexIQ Active.
Diversification Opportunities for IQ MacKay and IndexIQ Active
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MMIN and IndexIQ is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal and IndexIQ Active ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ Active ETF and IQ MacKay is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IQ MacKay Municipal are associated (or correlated) with IndexIQ Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ Active ETF has no effect on the direction of IQ MacKay i.e., IQ MacKay and IndexIQ Active go up and down completely randomly.
Pair Corralation between IQ MacKay and IndexIQ Active
Given the investment horizon of 90 days IQ MacKay Municipal is expected to generate 1.52 times more return on investment than IndexIQ Active. However, IQ MacKay is 1.52 times more volatile than IndexIQ Active ETF. It trades about 0.02 of its potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.01 per unit of risk. If you would invest 2,410 in IQ MacKay Municipal on August 25, 2024 and sell it today you would earn a total of 9.00 from holding IQ MacKay Municipal or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IQ MacKay Municipal vs. IndexIQ Active ETF
Performance |
| Timeline |
| IQ MacKay Municipal |
| IndexIQ Active ETF |
IQ MacKay and IndexIQ Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ MacKay and IndexIQ Active
The main advantage of trading using opposite IQ MacKay and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ MacKay position performs unexpectedly, IndexIQ Active can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IndexIQ Active will offset losses from the drop in IndexIQ Active's long position.| IQ MacKay vs. IQ MacKay Municipal | IQ MacKay vs. Franklin Liberty Federal | IQ MacKay vs. Columbia Multi Sector Municipal | IQ MacKay vs. Hartford Municipal Opportunities |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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