Correlation Between Mainstay Cushing and Prudential Absolute
Can any of the company-specific risk be diversified away by investing in both Mainstay Cushing and Prudential Absolute 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 Mainstay Cushing and Prudential Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Cushing Mlp and Prudential Absolute Return, you can compare the effects of market volatilities on Mainstay Cushing and Prudential Absolute 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 Mainstay Cushing with a short position of Prudential Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Cushing and Prudential Absolute.
Diversification Opportunities for Mainstay Cushing and Prudential Absolute
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and Prudential is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Cushing Mlp and Prudential Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Absolute and Mainstay Cushing 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 Mainstay Cushing Mlp are associated (or correlated) with Prudential Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Absolute has no effect on the direction of Mainstay Cushing i.e., Mainstay Cushing and Prudential Absolute go up and down completely randomly.
Pair Corralation between Mainstay Cushing and Prudential Absolute
Assuming the 90 days horizon Mainstay Cushing Mlp is expected to generate 7.32 times more return on investment than Prudential Absolute. However, Mainstay Cushing is 7.32 times more volatile than Prudential Absolute Return. It trades about 0.25 of its potential returns per unit of risk. Prudential Absolute Return is currently generating about 0.18 per unit of risk. If you would invest 1,002 in Mainstay Cushing Mlp on September 1, 2024 and sell it today you would earn a total of 319.00 from holding Mainstay Cushing Mlp or generate 31.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Mainstay Cushing Mlp vs. Prudential Absolute Return
Performance |
| Timeline |
| Mainstay Cushing Mlp |
| Prudential Absolute |
Mainstay Cushing and Prudential Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Cushing and Prudential Absolute
The main advantage of trading using opposite Mainstay Cushing and Prudential Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Cushing position performs unexpectedly, Prudential Absolute 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 Prudential Absolute will offset losses from the drop in Prudential Absolute's long position.| Mainstay Cushing vs. Mainstay High Yield | Mainstay Cushing vs. Mainstay Tax Free | Mainstay Cushing vs. Mainstay Income Builder | Mainstay Cushing vs. Mainstay Large Cap |
Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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