Correlation Between VanEck Intermediate and IQ MacKay

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

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

Diversification Opportunities for VanEck Intermediate and IQ MacKay

0.98

Correlation Coefficient

VanEck Intermediate  IQ MacKay

Almost no diversification

The 3 months correlation between VanEck and MMIN is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Intermediate Muni 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 VanEck Intermediate 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 VanEck Intermediate Muni 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 VanEck Intermediate i.e., VanEck Intermediate and IQ MacKay go up and down completely randomly.

Pair Corralation between VanEck Intermediate and IQ MacKay

Considering the 90-day investment horizon VanEck Intermediate is expected to generate 1.3 times less return on investment than IQ MacKay. But when comparing it to its historical volatility, VanEck Intermediate Muni is 1.23 times less risky than IQ MacKay. It trades about 0.08 of its potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,162  in IQ MacKay Municipal on July 7, 2024 and sell it today you would earn a total of  279.00  from holding IQ MacKay Municipal or generate 12.9% return on investment over 90 days.

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

VanEck Intermediate Muni  vs.  IQ MacKay Municipal

VanEck Intermediate Muni

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Intermediate Muni are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, VanEck Intermediate is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

IQ MacKay Municipal

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IQ MacKay Municipal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. 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 VanEck Intermediate and IQ MacKay

The main advantage of trading using opposite VanEck Intermediate and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Intermediate 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 VanEck Intermediate Muni 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.