Correlation Between IShares National and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both IShares National and IQ MacKay 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 IShares National and IQ MacKay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares National Muni and IQ MacKay Municipal, you can compare the effects of market volatilities on IShares National and IQ MacKay 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 IShares National with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares National and IQ MacKay.
Diversification Opportunities for IShares National and IQ MacKay
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and MMIT is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares National Muni and IQ MacKay Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay Municipal and IShares National 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 iShares National Muni are associated (or correlated) with IQ MacKay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ MacKay Municipal has no effect on the direction of IShares National i.e., IShares National and IQ MacKay go up and down completely randomly.
Pair Corralation between IShares National and IQ MacKay
Considering the 90-day investment horizon IShares National is expected to generate 1.0 times less return on investment than IQ MacKay. In addition to that, IShares National is 1.18 times more volatile than IQ MacKay Municipal. It trades about 0.09 of its total potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.11 per unit of volatility. If you would invest 2,415 in IQ MacKay Municipal on August 27, 2024 and sell it today you would earn a total of 18.00 from holding IQ MacKay Municipal or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares National Muni vs. IQ MacKay Municipal
Performance |
| Timeline |
| iShares National Muni |
| IQ MacKay Municipal |
IShares National and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares National and IQ MacKay
The main advantage of trading using opposite IShares National and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares National position performs unexpectedly, IQ MacKay 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 IQ MacKay will offset losses from the drop in IQ MacKay's long position.| IShares National vs. SSGA Active Trust | IShares National vs. SPDR MarketAxess Investment | IShares National vs. SSGA Active Trust |
| IQ MacKay vs. SSGA Active Trust | IQ MacKay vs. SPDR MarketAxess Investment | IQ MacKay vs. SSGA Active Trust |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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