Correlation Between BlackRock High and IQ MacKay

Can any of the company-specific risk be diversified away by investing in both BlackRock High 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 BlackRock High and IQ MacKay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock High Yield and IQ MacKay Municipal, you can compare the effects of market volatilities on BlackRock High 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 BlackRock High with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock High and IQ MacKay.

Diversification Opportunities for BlackRock High and IQ MacKay

-0.21

Correlation Coefficient

BlackRock High  IQ MacKay

Very good diversification

The 3 months correlation between BlackRock and MMIT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock High Yield 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 BlackRock High 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 BlackRock High Yield 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 BlackRock High i.e., BlackRock High and IQ MacKay go up and down completely randomly.

Pair Corralation between BlackRock High and IQ MacKay

Given the investment horizon of 90 days BlackRock High is expected to generate 1.08 times less return on investment than IQ MacKay. In addition to that, BlackRock High is 1.49 times more volatile than IQ MacKay Municipal. It trades about 0.03 of its total potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.04 per unit of volatility. If you would invest  2,406  in IQ MacKay Municipal on December 5, 2024 and sell it today you would earn a total of  26.00  from holding IQ MacKay Municipal or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.7%
Values	Daily Returns

BlackRock High Yield  vs.  IQ MacKay Municipal

BlackRock High Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, BlackRock High is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

IQ MacKay Municipal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQ MacKay Municipal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, IQ MacKay is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BlackRock High and IQ MacKay

The main advantage of trading using opposite BlackRock High and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock High 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 BlackRock High Yield 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.