Correlation Between IQ MacKay and First Trust
Can any of the company-specific risk be diversified away by investing in both IQ MacKay and First Trust 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 First Trust 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 First Trust Municipal, you can compare the effects of market volatilities on IQ MacKay and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ MacKay and First Trust.
Diversification Opportunities for IQ MacKay and First Trust
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MMIT and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal and First Trust Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Municipal has no effect on the direction of IQ MacKay i.e., IQ MacKay and First Trust go up and down completely randomly.
Pair Corralation between IQ MacKay and First Trust
Given the investment horizon of 90 days IQ MacKay Municipal is expected to generate 0.82 times more return on investment than First Trust. However, IQ MacKay Municipal is 1.22 times less risky than First Trust. It trades about 0.14 of its potential returns per unit of risk. First Trust Municipal is currently generating about 0.1 per unit of risk. If you would invest 2,422 in IQ MacKay Municipal on September 3, 2024 and sell it today you would earn a total of 22.00 from holding IQ MacKay Municipal or generate 0.91% 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. First Trust Municipal
Performance |
| Timeline |
| IQ MacKay Municipal |
| First Trust Municipal |
IQ MacKay and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ MacKay and First Trust
The main advantage of trading using opposite IQ MacKay and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ MacKay position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| IQ MacKay vs. IQ MacKay Municipal | IQ MacKay vs. Hartford Municipal Opportunities | IQ MacKay vs. Columbia Multi Sector Municipal | IQ MacKay vs. Franklin Liberty Federal |
| First Trust vs. SSGA Active Trust | First Trust vs. SPDR Nuveen Municipal | First Trust vs. iShares Short Maturity | First Trust 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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