Correlation Between TrueShares Structured and IQ MacKay

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

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

Diversification Opportunities for TrueShares Structured and IQ MacKay

0.2

Correlation Coefficient

TrueShares Structured  IQ MacKay

Modest diversification

The 3 months correlation between TrueShares and MMIN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding TrueShares Structured Outcome 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 TrueShares Structured 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 TrueShares Structured Outcome 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 TrueShares Structured i.e., TrueShares Structured and IQ MacKay go up and down completely randomly.

Pair Corralation between TrueShares Structured and IQ MacKay

Given the investment horizon of 90 days TrueShares Structured Outcome is expected to under-perform the IQ MacKay. In addition to that, TrueShares Structured is 2.07 times more volatile than IQ MacKay Municipal. It trades about -0.01 of its total potential returns per unit of risk. IQ MacKay Municipal is currently generating about -0.01 per unit of volatility. If you would invest  2,399  in IQ MacKay Municipal on October 9, 2024 and sell it today you would lose (4.00) from holding IQ MacKay Municipal or give up 0.17% of portfolio value over 90 days.

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

TrueShares Structured Outcome  vs.  IQ MacKay Municipal

TrueShares Structured

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TrueShares Structured Outcome are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TrueShares Structured is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 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 TrueShares Structured and IQ MacKay

The main advantage of trading using opposite TrueShares Structured and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrueShares Structured 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 TrueShares Structured Outcome 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.