Correlation Between Fabwx and Mainstay Convertible
Can any of the company-specific risk be diversified away by investing in both Fabwx and Mainstay Convertible 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 Fabwx and Mainstay Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabwx and Mainstay Vertible Fund, you can compare the effects of market volatilities on Fabwx and Mainstay Convertible 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 Fabwx with a short position of Mainstay Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabwx and Mainstay Convertible.
Diversification Opportunities for Fabwx and Mainstay Convertible
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fabwx and Mainstay is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fabwx and Mainstay Vertible Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Convertible and Fabwx 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 Fabwx are associated (or correlated) with Mainstay Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Convertible has no effect on the direction of Fabwx i.e., Fabwx and Mainstay Convertible go up and down completely randomly.
Pair Corralation between Fabwx and Mainstay Convertible
Assuming the 90 days horizon Fabwx is expected to generate 1.02 times less return on investment than Mainstay Convertible. In addition to that, Fabwx is 3.15 times more volatile than Mainstay Vertible Fund. It trades about 0.08 of its total potential returns per unit of risk. Mainstay Vertible Fund is currently generating about 0.24 per unit of volatility. If you would invest 1,876 in Mainstay Vertible Fund on November 9, 2024 and sell it today you would earn a total of 41.00 from holding Mainstay Vertible Fund or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabwx vs. Mainstay Vertible Fund
Performance |
| Timeline |
| Fabwx |
| Mainstay Convertible |
Fabwx and Mainstay Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabwx and Mainstay Convertible
The main advantage of trading using opposite Fabwx and Mainstay Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabwx position performs unexpectedly, Mainstay Convertible 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 Convertible will offset losses from the drop in Mainstay Convertible's long position.| Fabwx vs. The Gold Bullion | Fabwx vs. Gabelli Gold Fund | Fabwx vs. International Investors Gold | Fabwx vs. Wells Fargo Advantage |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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