Correlation Between Mackenzie Floating and Dynamic Active

Can any of the company-specific risk be diversified away by investing in both Mackenzie Floating and Dynamic Active 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 Mackenzie Floating and Dynamic Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mackenzie Floating Rate and Dynamic Active Preferred, you can compare the effects of market volatilities on Mackenzie Floating and Dynamic Active 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 Mackenzie Floating with a short position of Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Floating and Dynamic Active.

Diversification Opportunities for Mackenzie Floating and Dynamic Active

0.68

Correlation Coefficient

Mackenzie Floating  Dynamic Active

Poor diversification

The 3 months correlation between Mackenzie and Dynamic is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Floating Rate and Dynamic Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Preferred and Mackenzie Floating 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 Mackenzie Floating Rate are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Preferred has no effect on the direction of Mackenzie Floating i.e., Mackenzie Floating and Dynamic Active go up and down completely randomly.

Pair Corralation between Mackenzie Floating and Dynamic Active

Assuming the 90 days trading horizon Mackenzie Floating is expected to generate 7.53 times less return on investment than Dynamic Active. But when comparing it to its historical volatility, Mackenzie Floating Rate is 3.27 times less risky than Dynamic Active. It trades about 0.12 of its potential returns per unit of risk. Dynamic Active Preferred is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,226  in Dynamic Active Preferred on December 1, 2024 and sell it today you would earn a total of  153.00  from holding Dynamic Active Preferred or generate 6.87% return on investment over 90 days.

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

Mackenzie Floating Rate  vs.  Dynamic Active Preferred

Mackenzie Floating Rate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Floating Rate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mackenzie Floating is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Dynamic Active Preferred

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Preferred are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dynamic Active may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mackenzie Floating and Dynamic Active

The main advantage of trading using opposite Mackenzie Floating and Dynamic Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie Floating position performs unexpectedly, Dynamic Active 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 Dynamic Active will offset losses from the drop in Dynamic Active's long position.

The idea behind Mackenzie Floating Rate and Dynamic Active Preferred 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.