Correlation Between IQ MacKay and Invesco National
Can any of the company-specific risk be diversified away by investing in both IQ MacKay and Invesco National 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 Invesco National 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 Invesco National AMT Free, you can compare the effects of market volatilities on IQ MacKay and Invesco National 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 Invesco National. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ MacKay and Invesco National.
Diversification Opportunities for IQ MacKay and Invesco National
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MMIT and Invesco is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal and Invesco National AMT Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco National AMT 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 Invesco National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco National AMT has no effect on the direction of IQ MacKay i.e., IQ MacKay and Invesco National go up and down completely randomly.
Pair Corralation between IQ MacKay and Invesco National
Given the investment horizon of 90 days IQ MacKay is expected to generate 1.16 times less return on investment than Invesco National. But when comparing it to its historical volatility, IQ MacKay Municipal is 1.68 times less risky than Invesco National. It trades about 0.11 of its potential returns per unit of risk. Invesco National AMT Free is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,367 in Invesco National AMT Free on August 27, 2024 and sell it today you would earn a total of 20.00 from holding Invesco National AMT Free or generate 0.84% 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. Invesco National AMT Free
Performance |
| Timeline |
| IQ MacKay Municipal |
| Invesco National AMT |
IQ MacKay and Invesco National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ MacKay and Invesco National
The main advantage of trading using opposite IQ MacKay and Invesco National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ MacKay position performs unexpectedly, Invesco National 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 Invesco National will offset losses from the drop in Invesco National's long position.| IQ MacKay vs. SSGA Active Trust | IQ MacKay vs. SPDR MarketAxess Investment | IQ MacKay vs. SSGA Active Trust |
| Invesco National vs. Franklin Liberty Intermediate | Invesco National vs. Hartford Municipal Opportunities | Invesco National vs. IQ MacKay Municipal |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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