Correlation Between IQ MacKay and Overlay Shares
Can any of the company-specific risk be diversified away by investing in both IQ MacKay and Overlay Shares 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 Overlay Shares 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 Overlay Shares Municipal, you can compare the effects of market volatilities on IQ MacKay and Overlay Shares 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 Overlay Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ MacKay and Overlay Shares.
Diversification Opportunities for IQ MacKay and Overlay Shares
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MMIN and Overlay is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal and Overlay Shares Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overlay Shares Municipal 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 Overlay Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overlay Shares Municipal has no effect on the direction of IQ MacKay i.e., IQ MacKay and Overlay Shares go up and down completely randomly.
Pair Corralation between IQ MacKay and Overlay Shares
Given the investment horizon of 90 days IQ MacKay is expected to generate 1.28 times less return on investment than Overlay Shares. In addition to that, IQ MacKay is 1.38 times more volatile than Overlay Shares Municipal. It trades about 0.04 of its total potential returns per unit of risk. Overlay Shares Municipal is currently generating about 0.07 per unit of volatility. If you would invest 2,213 in Overlay Shares Municipal on August 23, 2024 and sell it today you would earn a total of 11.00 from holding Overlay Shares Municipal or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IQ MacKay Municipal vs. Overlay Shares Municipal
Performance |
| Timeline |
| IQ MacKay Municipal |
| Overlay Shares Municipal |
IQ MacKay and Overlay Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ MacKay and Overlay Shares
The main advantage of trading using opposite IQ MacKay and Overlay Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ MacKay position performs unexpectedly, Overlay Shares 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 Overlay Shares will offset losses from the drop in Overlay Shares' 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 |
| Overlay Shares vs. Overlay Shares Core | Overlay Shares vs. Overlay Shares Large | Overlay Shares vs. Overlay Shares Foreign | Overlay Shares vs. OVS SpA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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