Correlation Between First Trust and Mainstay Short
Can any of the company-specific risk be diversified away by investing in both First Trust and Mainstay Short 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 First Trust and Mainstay Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Specialty and Mainstay Short Duration, you can compare the effects of market volatilities on First Trust and Mainstay Short 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 First Trust with a short position of Mainstay Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Mainstay Short.
Diversification Opportunities for First Trust and Mainstay Short
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Mainstay is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty and Mainstay Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Short Duration and First Trust 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 First Trust Specialty are associated (or correlated) with Mainstay Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Short Duration has no effect on the direction of First Trust i.e., First Trust and Mainstay Short go up and down completely randomly.
Pair Corralation between First Trust and Mainstay Short
Considering the 90-day investment horizon First Trust Specialty is expected to generate 12.88 times more return on investment than Mainstay Short. However, First Trust is 12.88 times more volatile than Mainstay Short Duration. It trades about 0.12 of its potential returns per unit of risk. Mainstay Short Duration is currently generating about 0.17 per unit of risk. If you would invest 430.00 in First Trust Specialty on November 28, 2024 and sell it today you would earn a total of 12.00 from holding First Trust Specialty or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Specialty vs. Mainstay Short Duration
Performance |
| Timeline |
| First Trust Specialty |
| Mainstay Short Duration |
First Trust and Mainstay Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Mainstay Short
The main advantage of trading using opposite First Trust and Mainstay Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Mainstay Short 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 Short will offset losses from the drop in Mainstay Short's long position.| First Trust vs. MFS High Income | First Trust vs. MFS High Yield | First Trust vs. Blackrock Muniholdings Quality | First Trust vs. MFS Government Markets |
| Mainstay Short vs. Pace High Yield | Mainstay Short vs. Ab High Income | Mainstay Short vs. Artisan High Income | Mainstay Short vs. Access Flex High |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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