Correlation Between Formidable Fortress and IQ MacKay

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

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

Diversification Opportunities for Formidable Fortress and IQ MacKay

0.14

Correlation Coefficient

Formidable Fortress  IQ MacKay

Average diversification

The 3 months correlation between Formidable and MMIN is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Formidable Fortress ETF 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 Formidable Fortress 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 Formidable Fortress ETF 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 Formidable Fortress i.e., Formidable Fortress and IQ MacKay go up and down completely randomly.

Pair Corralation between Formidable Fortress and IQ MacKay

Given the investment horizon of 90 days Formidable Fortress ETF is expected to generate 2.2 times more return on investment than IQ MacKay. However, Formidable Fortress is 2.2 times more volatile than IQ MacKay Municipal. It trades about -0.01 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  2,904  in Formidable Fortress ETF on December 26, 2024 and sell it today you would lose (20.00) from holding Formidable Fortress ETF or give up 0.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Formidable Fortress ETF  vs.  IQ MacKay Municipal

Formidable Fortress ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Formidable Fortress ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Formidable Fortress is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

IQ MacKay Municipal

Risk-Adjusted Performance

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.

Pair Trading with Formidable Fortress and IQ MacKay

The main advantage of trading using opposite Formidable Fortress and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formidable Fortress 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 Formidable Fortress ETF 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.