Correlation Between Mainstay Convertible and L Abbett
Can any of the company-specific risk be diversified away by investing in both Mainstay Convertible and L Abbett 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 L Abbett 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 L Abbett Fundamental, you can compare the effects of market volatilities on Mainstay Convertible and L Abbett 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 L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Convertible and L Abbett.
Diversification Opportunities for Mainstay Convertible and L Abbett
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mainstay and LAVVX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and L Abbett Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Fundamental 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 L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Fundamental has no effect on the direction of Mainstay Convertible i.e., Mainstay Convertible and L Abbett go up and down completely randomly.
Pair Corralation between Mainstay Convertible and L Abbett
Assuming the 90 days horizon Mainstay Vertible Fund is expected to under-perform the L Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mainstay Vertible Fund is 1.23 times less risky than L Abbett. The mutual fund trades about -0.28 of its potential returns per unit of risk. The L Abbett Fundamental is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1,581 in L Abbett Fundamental on October 11, 2024 and sell it today you would lose (28.00) from holding L Abbett Fundamental or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Vertible Fund vs. L Abbett Fundamental
Performance |
| Timeline |
| Mainstay Convertible |
| L Abbett Fundamental |
Mainstay Convertible and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Convertible and L Abbett
The main advantage of trading using opposite Mainstay Convertible and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Convertible position performs unexpectedly, L Abbett 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 L Abbett will offset losses from the drop in L Abbett'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 |
| L Abbett vs. Fidelity Vertible Securities | L Abbett vs. Advent Claymore Convertible | L Abbett vs. Franklin Vertible Securities | L Abbett vs. Mainstay Vertible Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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