Correlation Between Mainstay Convertible and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Mainstay Convertible and Absolute 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 Mainstay Convertible and Absolute Convertible 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 Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Mainstay Convertible and Absolute 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 Mainstay Convertible with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Convertible and Absolute Convertible.
Diversification Opportunities for Mainstay Convertible and Absolute Convertible
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and Absolute is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible 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 Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Mainstay Convertible i.e., Mainstay Convertible and Absolute Convertible go up and down completely randomly.
Pair Corralation between Mainstay Convertible and Absolute Convertible
Assuming the 90 days horizon Mainstay Vertible Fund is expected to generate 9.79 times more return on investment than Absolute Convertible. However, Mainstay Convertible is 9.79 times more volatile than Absolute Convertible Arbitrage. It trades about 0.29 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.44 per unit of risk. If you would invest 1,889 in Mainstay Vertible Fund on August 28, 2024 and sell it today you would earn a total of 56.00 from holding Mainstay Vertible Fund or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mainstay Vertible Fund vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Mainstay Convertible |
| Absolute Convertible |
Mainstay Convertible and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Convertible and Absolute Convertible
The main advantage of trading using opposite Mainstay Convertible and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Convertible position performs unexpectedly, Absolute 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Mainstay Convertible vs. Mainstay High Yield | Mainstay Convertible vs. Mainstay Map Equity | Mainstay Convertible vs. Aquagold International | Mainstay Convertible vs. Morningstar Unconstrained Allocation |
| Absolute Convertible vs. Barings Active Short | Absolute Convertible vs. Ab Select Longshort | Absolute Convertible vs. Astor Longshort Fund | Absolute Convertible vs. Siit Ultra Short |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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