Correlation Between American Century and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both American Century 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 American Century and IQ MacKay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Diversified and IQ MacKay Municipal, you can compare the effects of market volatilities on American Century 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 American Century with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and IQ MacKay.
Diversification Opportunities for American Century and IQ MacKay
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and MMIN is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Century Diversified 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 American Century 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 American Century Diversified 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 American Century i.e., American Century and IQ MacKay go up and down completely randomly.
Pair Corralation between American Century and IQ MacKay
Given the investment horizon of 90 days American Century Diversified is expected to generate 0.85 times more return on investment than IQ MacKay. However, American Century Diversified is 1.17 times less risky than IQ MacKay. It trades about 0.05 of its potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.04 per unit of risk. If you would invest 4,722 in American Century Diversified on November 2, 2024 and sell it today you would earn a total of 298.00 from holding American Century Diversified or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Diversified vs. IQ MacKay Municipal
Performance |
| Timeline |
| American Century Div |
| IQ MacKay Municipal |
American Century and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and IQ MacKay
The main advantage of trading using opposite American Century and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century 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 American Century Diversified and IQ MacKay Municipal 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.
| IQ MacKay vs. IQ MacKay Municipal | IQ MacKay vs. Franklin Liberty Federal | IQ MacKay vs. Columbia Multi Sector Municipal | IQ MacKay vs. Hartford Municipal Opportunities |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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