Correlation Between Mainstay Convertible and Virtus Convertible
Can any of the company-specific risk be diversified away by investing in both Mainstay Convertible and Virtus 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 Virtus 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 Virtus Convertible, you can compare the effects of market volatilities on Mainstay Convertible and Virtus 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 Virtus Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Convertible and Virtus Convertible.
Diversification Opportunities for Mainstay Convertible and Virtus Convertible
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and Virtus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus 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 Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Mainstay Convertible i.e., Mainstay Convertible and Virtus Convertible go up and down completely randomly.
Pair Corralation between Mainstay Convertible and Virtus Convertible
Assuming the 90 days horizon Mainstay Convertible is expected to generate 1.68 times less return on investment than Virtus Convertible. But when comparing it to its historical volatility, Mainstay Vertible Fund is 1.07 times less risky than Virtus Convertible. It trades about 0.05 of its potential returns per unit of risk. Virtus Convertible is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,927 in Virtus Convertible on August 29, 2024 and sell it today you would earn a total of 795.00 from holding Virtus Convertible or generate 27.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Vertible Fund vs. Virtus Convertible
Performance |
| Timeline |
| Mainstay Convertible |
| Virtus Convertible |
Mainstay Convertible and Virtus Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Convertible and Virtus Convertible
The main advantage of trading using opposite Mainstay Convertible and Virtus Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Convertible position performs unexpectedly, Virtus 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 Virtus Convertible will offset losses from the drop in Virtus Convertible's long position.| Mainstay Convertible vs. Mainstay High Yield | Mainstay Convertible vs. Mainstay Income Builder | Mainstay Convertible vs. Mainstay Map Equity |
| Virtus Convertible vs. Hennessy Large Cap | Virtus Convertible vs. Financials Ultrasector Profund | Virtus Convertible vs. Icon Financial Fund | Virtus Convertible vs. Angel Oak Financial |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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