Correlation Between IQ MacKay and Hartford Municipal

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

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

Diversification Opportunities for IQ MacKay and Hartford Municipal

0.97

Correlation Coefficient

IQ MacKay  Hartford Municipal

Almost no diversification

The 3 months correlation between MMIT and Hartford is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal and Hartford Municipal Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal and IQ MacKay 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 IQ MacKay Municipal are associated (or correlated) with Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal has no effect on the direction of IQ MacKay i.e., IQ MacKay and Hartford Municipal go up and down completely randomly.

Pair Corralation between IQ MacKay and Hartford Municipal

Given the investment horizon of 90 days IQ MacKay is expected to generate 1.38 times less return on investment than Hartford Municipal. But when comparing it to its historical volatility, IQ MacKay Municipal is 1.06 times less risky than Hartford Municipal. It trades about 0.05 of its potential returns per unit of risk. Hartford Municipal Opportunities is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,884  in Hartford Municipal Opportunities on September 2, 2024 and sell it today you would earn a total of  40.00  from holding Hartford Municipal Opportunities or generate 1.03% return on investment over 90 days.

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

IQ MacKay Municipal  vs.  Hartford Municipal Opportuniti

IQ MacKay Municipal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IQ MacKay Municipal are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, IQ MacKay is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Hartford Municipal

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Municipal Opportunities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Hartford Municipal is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IQ MacKay and Hartford Municipal

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

The idea behind IQ MacKay Municipal and Hartford Municipal Opportunities 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..