Correlation Between Mainstay Convertible and Rational Defensive
Can any of the company-specific risk be diversified away by investing in both Mainstay Convertible and Rational Defensive 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 Convertible and Rational Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Vertible Fund and Rational Defensive Growth, you can compare the effects of market volatilities on Mainstay Convertible and Rational Defensive 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 Convertible with a short position of Rational Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Convertible and Rational Defensive.
Diversification Opportunities for Mainstay Convertible and Rational Defensive
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mainstay and Rational is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and Rational Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Defensive Growth and Mainstay Convertible 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 Vertible Fund are associated (or correlated) with Rational Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Defensive Growth has no effect on the direction of Mainstay Convertible i.e., Mainstay Convertible and Rational Defensive go up and down completely randomly.
Pair Corralation between Mainstay Convertible and Rational Defensive
Assuming the 90 days horizon Mainstay Vertible Fund is expected to generate 0.47 times more return on investment than Rational Defensive. However, Mainstay Vertible Fund is 2.12 times less risky than Rational Defensive. It trades about 0.27 of its potential returns per unit of risk. Rational Defensive Growth is currently generating about 0.07 per unit of risk. If you would invest 1,876 in Mainstay Vertible Fund on October 24, 2024 and sell it today you would earn a total of 40.00 from holding Mainstay Vertible Fund or generate 2.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Mainstay Vertible Fund vs. Rational Defensive Growth
Performance |
Timeline |
Mainstay Convertible |
Rational Defensive Growth |
Mainstay Convertible and Rational Defensive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mainstay Convertible and Rational Defensive
The main advantage of trading using opposite Mainstay Convertible and Rational Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Convertible position performs unexpectedly, Rational Defensive 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 Rational Defensive will offset losses from the drop in Rational Defensive's long position.Mainstay Convertible vs. Mainstay High Yield | Mainstay Convertible vs. Mainstay Income Builder | Mainstay Convertible vs. Mainstay Sp 500 | Mainstay Convertible vs. Mainstay Large Cap |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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