Correlation Between Xtrackers California and IQ MacKay

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Xtrackers California 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 California 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 California Municipal and IQ MacKay Municipal, you can compare the effects of market volatilities on Xtrackers California 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 California with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and IQ MacKay.

Diversification Opportunities for Xtrackers California and IQ MacKay

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Xtrackers and MMIN is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal 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 California 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 California Municipal 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 California i.e., Xtrackers California and IQ MacKay go up and down completely randomly.

Pair Corralation between Xtrackers California and IQ MacKay

Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to under-perform the IQ MacKay. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers California Municipal is 1.01 times less risky than IQ MacKay. The etf trades about -0.05 of its potential returns per unit of risk. The IQ MacKay Municipal is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,387  in IQ MacKay Municipal on October 25, 2024 and sell it today you would lose (1.00) from holding IQ MacKay Municipal or give up 0.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Xtrackers California Municipal  vs.  IQ MacKay Municipal

 Performance 
       Timeline  
Xtrackers California 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Xtrackers California Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xtrackers California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
IQ MacKay Municipal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days IQ MacKay Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, IQ MacKay is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Xtrackers California and IQ MacKay Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers California and IQ MacKay

The main advantage of trading using opposite Xtrackers California and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California 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 Xtrackers California Municipal 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.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

Other Complementary Tools

AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years