Correlation Between IShares Broad and IQ MacKay

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

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

Diversification Opportunities for IShares Broad and IQ MacKay

0.96

Correlation Coefficient

IShares Broad  IQ MacKay

Almost no diversification

The 3 months correlation between IShares and IQHI is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Broad USD and IQ MacKay ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay ESG and IShares Broad 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 iShares Broad USD 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 ESG has no effect on the direction of IShares Broad i.e., IShares Broad and IQ MacKay go up and down completely randomly.

Pair Corralation between IShares Broad and IQ MacKay

Given the investment horizon of 90 days iShares Broad USD is expected to generate 1.16 times more return on investment than IQ MacKay. However, IShares Broad is 1.16 times more volatile than IQ MacKay ESG. It trades about 0.21 of its potential returns per unit of risk. IQ MacKay ESG is currently generating about 0.19 per unit of risk. If you would invest  3,655  in iShares Broad USD on September 2, 2024 and sell it today you would earn a total of  98.00  from holding iShares Broad USD or generate 2.68% return on investment over 90 days.

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

iShares Broad USD  vs.  IQ MacKay ESG

iShares Broad USD

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Broad USD are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, IShares Broad is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

IQ MacKay ESG

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IQ MacKay ESG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, IQ MacKay is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares Broad and IQ MacKay

The main advantage of trading using opposite IShares Broad and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Broad 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 iShares Broad USD and IQ MacKay ESG 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.