Correlation Between IQ MacKay and PIMCO ETF

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

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

Diversification Opportunities for IQ MacKay and PIMCO ETF

0.96

Correlation Coefficient

IQ MacKay  PIMCO ETF

Almost no diversification

The 3 months correlation between MMIN and PIMCO is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust and IQ MacKay 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 IQ MacKay Municipal are associated (or correlated) with PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of IQ MacKay i.e., IQ MacKay and PIMCO ETF go up and down completely randomly.

Pair Corralation between IQ MacKay and PIMCO ETF

Given the investment horizon of 90 days IQ MacKay Municipal is expected to under-perform the PIMCO ETF. In addition to that, IQ MacKay is 1.05 times more volatile than PIMCO ETF Trust. It trades about -0.03 of its total potential returns per unit of risk. PIMCO ETF Trust is currently generating about -0.01 per unit of volatility. If you would invest  4,470  in PIMCO ETF Trust on December 27, 2024 and sell it today you would lose (13.00) from holding PIMCO ETF Trust or give up 0.29% of portfolio value over 90 days.

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

IQ MacKay Municipal  vs.  PIMCO ETF Trust

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.

PIMCO ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days PIMCO ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, PIMCO ETF is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IQ MacKay and PIMCO ETF

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

The idea behind IQ MacKay Municipal and PIMCO ETF Trust 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.