Correlation Between IShares 0 and IQ MacKay

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Can any of the company-specific risk be diversified away by investing in both IShares 0 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 0 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 0 5 Year and IQ MacKay ESG, you can compare the effects of market volatilities on IShares 0 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 0 with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 0 and IQ MacKay.

Diversification Opportunities for IShares 0 and IQ MacKay

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between IShares and IQHI is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares 0 5 Year and IQ MacKay ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay ESG and IShares 0 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 0 5 Year 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 ESG has no effect on the direction of IShares 0 i.e., IShares 0 and IQ MacKay go up and down completely randomly.

Pair Corralation between IShares 0 and IQ MacKay

Given the investment horizon of 90 days IShares 0 is expected to generate 1.84 times less return on investment than IQ MacKay. But when comparing it to its historical volatility, iShares 0 5 Year is 1.19 times less risky than IQ MacKay. It trades about 0.15 of its potential returns per unit of risk. IQ MacKay ESG is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,660  in IQ MacKay ESG on August 29, 2024 and sell it today you would earn a total of  31.00  from holding IQ MacKay ESG or generate 1.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

iShares 0 5 Year  vs.  IQ MacKay ESG

 Performance 
       Timeline  
iShares 0 5 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in iShares 0 5 Year are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IShares 0 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
IQ MacKay ESG 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in IQ MacKay ESG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, IQ MacKay is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

IShares 0 and IQ MacKay Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares 0 and IQ MacKay

The main advantage of trading using opposite IShares 0 and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 0 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.
The idea behind iShares 0 5 Year and IQ MacKay ESG 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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