Correlation Between Xtrackers Municipal and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both Xtrackers Municipal 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 Xtrackers Municipal and IQ MacKay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Municipal Infrastructure and IQ MacKay Municipal, you can compare the effects of market volatilities on Xtrackers Municipal 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 Xtrackers Municipal with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Municipal and IQ MacKay.
Diversification Opportunities for Xtrackers Municipal and IQ MacKay
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and MMIT is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Municipal Infrastruc 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 Xtrackers Municipal 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 Xtrackers Municipal Infrastructure 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 Xtrackers Municipal i.e., Xtrackers Municipal and IQ MacKay go up and down completely randomly.
Pair Corralation between Xtrackers Municipal and IQ MacKay
Given the investment horizon of 90 days Xtrackers Municipal Infrastructure is expected to generate 1.75 times more return on investment than IQ MacKay. However, Xtrackers Municipal is 1.75 times more volatile than IQ MacKay Municipal. It trades about 0.15 of its potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.16 per unit of risk. If you would invest 2,542 in Xtrackers Municipal Infrastructure on August 29, 2024 and sell it today you would earn a total of 49.00 from holding Xtrackers Municipal Infrastructure or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Municipal Infrastruc vs. IQ MacKay Municipal
Performance |
| Timeline |
| Xtrackers Municipal |
| IQ MacKay Municipal |
Xtrackers Municipal and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Municipal and IQ MacKay
The main advantage of trading using opposite Xtrackers Municipal and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Municipal 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.| Xtrackers Municipal vs. VanEck Long Muni | Xtrackers Municipal vs. VanEck Short High | Xtrackers Municipal vs. VanEck CEF Municipal | Xtrackers Municipal vs. PIMCO Short Term |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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