Correlation Between Davenport Small and Mainstay Government
Can any of the company-specific risk be diversified away by investing in both Davenport Small and Mainstay Government 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 Davenport Small and Mainstay Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davenport Small Cap and Mainstay Government Fund, you can compare the effects of market volatilities on Davenport Small and Mainstay Government 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 Davenport Small with a short position of Mainstay Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davenport Small and Mainstay Government.
Diversification Opportunities for Davenport Small and Mainstay Government
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Davenport and Mainstay is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Davenport Small Cap and Mainstay Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Government and Davenport Small 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 Davenport Small Cap are associated (or correlated) with Mainstay Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Government has no effect on the direction of Davenport Small i.e., Davenport Small and Mainstay Government go up and down completely randomly.
Pair Corralation between Davenport Small and Mainstay Government
Assuming the 90 days horizon Davenport Small Cap is expected to generate 3.67 times more return on investment than Mainstay Government. However, Davenport Small is 3.67 times more volatile than Mainstay Government Fund. It trades about 0.05 of its potential returns per unit of risk. Mainstay Government Fund is currently generating about 0.08 per unit of risk. If you would invest 1,756 in Davenport Small Cap on September 1, 2024 and sell it today you would earn a total of 140.00 from holding Davenport Small Cap or generate 7.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Davenport Small Cap vs. Mainstay Government Fund
Performance |
| Timeline |
| Davenport Small Cap |
| Mainstay Government |
Davenport Small and Mainstay Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davenport Small and Mainstay Government
The main advantage of trading using opposite Davenport Small and Mainstay Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davenport Small position performs unexpectedly, Mainstay Government 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 Mainstay Government will offset losses from the drop in Mainstay Government's long position.| Davenport Small vs. Thrivent Income Fund | Davenport Small vs. Multisector Bond Sma | Davenport Small vs. Versatile Bond Portfolio | Davenport Small vs. Artisan High Income |
| Mainstay Government vs. Mainstay Tax Free | Mainstay Government vs. Mainstay Large Cap | Mainstay Government vs. Mainstay Large Cap | Mainstay Government 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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