Correlation Between Mackenzie TIPS and Mackenzie Floating

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

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

Diversification Opportunities for Mackenzie TIPS and Mackenzie Floating

-0.72

Correlation Coefficient

Mackenzie TIPS  Mackenzie Floating

Pay attention - limited upside

The 3 months correlation between Mackenzie and Mackenzie is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie TIPS Index and Mackenzie Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Floating Rate and Mackenzie TIPS 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 TIPS Index are associated (or correlated) with Mackenzie Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Floating Rate has no effect on the direction of Mackenzie TIPS i.e., Mackenzie TIPS and Mackenzie Floating go up and down completely randomly.

Pair Corralation between Mackenzie TIPS and Mackenzie Floating

Assuming the 90 days trading horizon Mackenzie TIPS Index is expected to under-perform the Mackenzie Floating. In addition to that, Mackenzie TIPS is 1.93 times more volatile than Mackenzie Floating Rate. It trades about -0.16 of its total potential returns per unit of risk. Mackenzie Floating Rate is currently generating about 0.35 per unit of volatility. If you would invest  1,659  in Mackenzie Floating Rate on October 6, 2024 and sell it today you would earn a total of  49.00  from holding Mackenzie Floating Rate or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Mackenzie TIPS Index  vs.  Mackenzie Floating Rate

Mackenzie TIPS Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mackenzie TIPS Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mackenzie TIPS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Mackenzie Floating Rate

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Floating Rate are ranked lower than 27 (%) 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.

Pair Trading with Mackenzie TIPS and Mackenzie Floating

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

The idea behind Mackenzie TIPS Index and Mackenzie Floating Rate 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.