Correlation Between Federated Government and Mainstay High
Can any of the company-specific risk be diversified away by investing in both Federated Government and Mainstay High 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 Federated Government and Mainstay High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Ultrashort and Mainstay High Yield, you can compare the effects of market volatilities on Federated Government and Mainstay High 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 Federated Government with a short position of Mainstay High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Mainstay High.
Diversification Opportunities for Federated Government and Mainstay High
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEDERATED and Mainstay is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Mainstay High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay High Yield and Federated Government 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 Federated Government Ultrashort are associated (or correlated) with Mainstay High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay High Yield has no effect on the direction of Federated Government i.e., Federated Government and Mainstay High go up and down completely randomly.
Pair Corralation between Federated Government and Mainstay High
Assuming the 90 days horizon Federated Government is expected to generate 1.12 times less return on investment than Mainstay High. But when comparing it to its historical volatility, Federated Government Ultrashort is 1.8 times less risky than Mainstay High. It trades about 0.25 of its potential returns per unit of risk. Mainstay High Yield is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 520.00 in Mainstay High Yield on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Mainstay High Yield or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Mainstay High Yield
Performance |
| Timeline |
| Federated Government |
| Mainstay High Yield |
Federated Government and Mainstay High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Mainstay High
The main advantage of trading using opposite Federated Government and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Mainstay High 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 High will offset losses from the drop in Mainstay High's long position.| Federated Government vs. Short Term Fund R | Federated Government vs. Putnam Ultra Short | Federated Government vs. HUMANA INC | Federated Government vs. Aquagold International |
| Mainstay High vs. Transamerica Intermediate Muni | Mainstay High vs. Nuveen Massachusetts Municipal | Mainstay High vs. Gamco Global Telecommunications | Mainstay High vs. Federated Government Ultrashort |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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