Correlation Between T Rex and IQ MacKay

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

By analyzing existing cross correlation between T Rex 2X Long and IQ MacKay Municipal, you can compare the effects of market volatilities on T Rex 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 T Rex with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and IQ MacKay.

Diversification Opportunities for T Rex and IQ MacKay

-0.47

Correlation Coefficient

T Rex  IQ MacKay

Very good diversification

The 3 months correlation between NVDX and MMIN is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long 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 T Rex 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 T Rex 2X Long 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 T Rex i.e., T Rex and IQ MacKay go up and down completely randomly.

Pair Corralation between T Rex and IQ MacKay

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the IQ MacKay. In addition to that, T Rex is 26.94 times more volatile than IQ MacKay Municipal. It trades about -0.07 of its total potential returns per unit of risk. IQ MacKay Municipal is currently generating about -0.04 per unit of volatility. If you would invest  2,369  in IQ MacKay Municipal on December 26, 2024 and sell it today you would lose (19.00) from holding IQ MacKay Municipal or give up 0.8% of portfolio value over 90 days.

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

T Rex 2X Long  vs.  IQ MacKay Municipal

T Rex 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rex 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

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.

Pair Trading with T Rex and IQ MacKay

The main advantage of trading using opposite T Rex and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex 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 T Rex 2X Long 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.