Correlation Between IShares Broad and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both IShares Broad 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 Broad 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 Broad USD and IQ MacKay ESG, you can compare the effects of market volatilities on IShares Broad 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 Broad with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Broad and IQ MacKay.
Diversification Opportunities for IShares Broad and IQ MacKay
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IQHI is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Broad USD 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 Broad 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 Broad USD 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 Broad i.e., IShares Broad and IQ MacKay go up and down completely randomly.
Pair Corralation between IShares Broad and IQ MacKay
Given the investment horizon of 90 days iShares Broad USD is expected to generate 1.27 times more return on investment than IQ MacKay. However, IShares Broad is 1.27 times more volatile than IQ MacKay ESG. It trades about 0.1 of its potential returns per unit of risk. IQ MacKay ESG is currently generating about 0.11 per unit of risk. If you would invest 3,074 in iShares Broad USD on August 26, 2024 and sell it today you would earn a total of 649.00 from holding iShares Broad USD or generate 21.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Broad USD vs. IQ MacKay ESG
Performance |
| Timeline |
| iShares Broad USD |
| IQ MacKay ESG |
IShares Broad and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Broad and IQ MacKay
The main advantage of trading using opposite IShares Broad and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Broad 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 Broad vs. First Trust Senior | IShares Broad vs. First Trust Low | IShares Broad vs. First Trust Enhanced | IShares Broad vs. First Trust TCW |
| IQ MacKay vs. First Trust Senior | IQ MacKay vs. First Trust Low | IQ MacKay vs. First Trust Enhanced | IQ MacKay vs. First Trust TCW |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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