Correlation Between VanEck Long and IQ MacKay

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

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

Diversification Opportunities for VanEck Long and IQ MacKay

0.98

Correlation Coefficient

VanEck Long  IQ MacKay

Almost no diversification

The 3 months correlation between VanEck and MMIN is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Long Muni 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 VanEck Long 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 VanEck Long Muni 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 VanEck Long i.e., VanEck Long and IQ MacKay go up and down completely randomly.

Pair Corralation between VanEck Long and IQ MacKay

Considering the 90-day investment horizon VanEck Long Muni is expected to generate 1.36 times more return on investment than IQ MacKay. However, VanEck Long is 1.36 times more volatile than IQ MacKay Municipal. It trades about 0.04 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  1,803  in VanEck Long Muni on September 13, 2024 and sell it today you would earn a total of  17.00  from holding VanEck Long Muni or generate 0.94% return on investment over 90 days.

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

VanEck Long Muni  vs.  IQ MacKay Municipal

VanEck Long Muni

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Long Muni are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, VanEck Long is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

IQ MacKay Municipal

Risk-Adjusted Performance

2 of 100

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 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 VanEck Long and IQ MacKay

The main advantage of trading using opposite VanEck Long and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Long 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 VanEck Long Muni 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.