Correlation Between Xtrackers Municipal and IQ MacKay

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

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

Diversification Opportunities for Xtrackers Municipal and IQ MacKay

0.68

Correlation Coefficient

Xtrackers Municipal  IQ MacKay

Poor diversification

The 3 months correlation between Xtrackers and MMIN is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Municipal Infrastruc 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 Xtrackers Municipal 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 Xtrackers Municipal Infrastructure 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 Xtrackers Municipal i.e., Xtrackers Municipal and IQ MacKay go up and down completely randomly.

Pair Corralation between Xtrackers Municipal and IQ MacKay

Given the investment horizon of 90 days Xtrackers Municipal Infrastructure is expected to under-perform the IQ MacKay. In addition to that, Xtrackers Municipal is 1.3 times more volatile than IQ MacKay Municipal. It trades about -0.08 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  2,374  in IQ MacKay Municipal on December 28, 2024 and sell it today you would lose (18.00) from holding IQ MacKay Municipal or give up 0.76% of portfolio value over 90 days.

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

Xtrackers Municipal Infrastruc  vs.  IQ MacKay Municipal

Xtrackers Municipal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers Municipal Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Xtrackers Municipal is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 Xtrackers Municipal and IQ MacKay

The main advantage of trading using opposite Xtrackers Municipal and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Municipal 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 Xtrackers Municipal Infrastructure 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.