Correlation Between IShares Short and IQ MacKay

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

Diversification Opportunities for IShares Short and IQ MacKay

0.38

Correlation Coefficient

IShares Short  IQ MacKay

Weak diversification

The 3 months correlation between IShares and MMIT is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity 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 IShares Short 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 Short Maturity 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 IShares Short i.e., IShares Short and IQ MacKay go up and down completely randomly.

Pair Corralation between IShares Short and IQ MacKay

Given the investment horizon of 90 days iShares Short Maturity is expected to generate 0.27 times more return on investment than IQ MacKay. However, iShares Short Maturity is 3.64 times less risky than IQ MacKay. It trades about 0.15 of its potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.02 per unit of risk. If you would invest  4,992  in iShares Short Maturity on September 17, 2024 and sell it today you would earn a total of  23.00  from holding iShares Short Maturity or generate 0.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

iShares Short Maturity  vs.  IQ MacKay Municipal

iShares Short Maturity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Maturity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Short is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

IQ MacKay Municipal

Risk-Adjusted Performance

0 of 100

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 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 IShares Short and IQ MacKay

The main advantage of trading using opposite IShares Short and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short 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 iShares Short Maturity 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.