Correlation Between IQ MacKay and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both IQ MacKay and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley ETF, you can compare the effects of market volatilities on IQ MacKay and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ MacKay and Morgan Stanley.
Diversification Opportunities for IQ MacKay and Morgan Stanley
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MMIT and Morgan is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal and Morgan Stanley ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley ETF has no effect on the direction of IQ MacKay i.e., IQ MacKay and Morgan Stanley go up and down completely randomly.
Pair Corralation between IQ MacKay and Morgan Stanley
Given the investment horizon of 90 days IQ MacKay is expected to generate 1.63 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, IQ MacKay Municipal is 1.32 times less risky than Morgan Stanley. It trades about 0.11 of its potential returns per unit of risk. Morgan Stanley ETF is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,218 in Morgan Stanley ETF on August 29, 2024 and sell it today you would earn a total of 67.00 from holding Morgan Stanley ETF or generate 1.28% 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. Morgan Stanley ETF
Performance |
| Timeline |
| IQ MacKay Municipal |
| Morgan Stanley ETF |
IQ MacKay and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ MacKay and Morgan Stanley
The main advantage of trading using opposite IQ MacKay and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ MacKay position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.The idea behind IQ MacKay Municipal and Morgan Stanley ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Morgan Stanley vs. SSGA Active Trust | Morgan Stanley vs. SPDR Nuveen Municipal | Morgan Stanley vs. iShares Short Maturity | Morgan Stanley vs. First Trust Flexible |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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