Correlation Between Mainstay Convertible and Teton Convertible
Can any of the company-specific risk be diversified away by investing in both Mainstay Convertible and Teton 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 Teton 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 Teton Vertible Securities, you can compare the effects of market volatilities on Mainstay Convertible and Teton 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 Teton Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Convertible and Teton Convertible.
Diversification Opportunities for Mainstay Convertible and Teton Convertible
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and Teton is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and Teton Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Vertible Securities 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 Teton Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Vertible Securities has no effect on the direction of Mainstay Convertible i.e., Mainstay Convertible and Teton Convertible go up and down completely randomly.
Pair Corralation between Mainstay Convertible and Teton Convertible
Assuming the 90 days horizon Mainstay Convertible is expected to generate 2.47 times less return on investment than Teton Convertible. But when comparing it to its historical volatility, Mainstay Vertible Fund is 1.46 times less risky than Teton Convertible. It trades about 0.33 of its potential returns per unit of risk. Teton Vertible Securities is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 1,241 in Teton Vertible Securities on August 31, 2024 and sell it today you would earn a total of 105.00 from holding Teton Vertible Securities or generate 8.46% 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. Teton Vertible Securities
Performance |
| Timeline |
| Mainstay Convertible |
| Teton Vertible Securities |
Mainstay Convertible and Teton Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Convertible and Teton Convertible
The main advantage of trading using opposite Mainstay Convertible and Teton Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Convertible position performs unexpectedly, Teton 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 Teton Convertible will offset losses from the drop in Teton Convertible's long position.The idea behind Mainstay Vertible Fund and Teton Vertible Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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