Correlation Between IQ MacKay and IShares National

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

Diversification Opportunities for IQ MacKay and IShares National

0.86

Correlation Coefficient

IQ MacKay  IShares National

Very poor diversification

The 3 months correlation between MMIT and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal and iShares National Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares National Muni 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 IShares National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares National Muni has no effect on the direction of IQ MacKay i.e., IQ MacKay and IShares National go up and down completely randomly.

Pair Corralation between IQ MacKay and IShares National

Given the investment horizon of 90 days IQ MacKay Municipal is expected to generate 0.87 times more return on investment than IShares National. However, IQ MacKay Municipal is 1.15 times less risky than IShares National. It trades about -0.16 of its potential returns per unit of risk. iShares National Muni is currently generating about -0.24 per unit of risk. If you would invest  2,425  in IQ MacKay Municipal on September 26, 2024 and sell it today you would lose (18.00) from holding IQ MacKay Municipal or give up 0.74% of portfolio value over 90 days.

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

IQ MacKay Municipal  vs.  iShares National Muni

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.

iShares National Muni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares National Muni has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares National is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IQ MacKay and IShares National

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

The idea behind IQ MacKay Municipal and iShares National Muni 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..