Correlation Between Mainstay High and Mainstay Tax
Can any of the company-specific risk be diversified away by investing in both Mainstay High and Mainstay Tax 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 High and Mainstay Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay High Yield and Mainstay Tax Free, you can compare the effects of market volatilities on Mainstay High and Mainstay Tax 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 High with a short position of Mainstay Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay High and Mainstay Tax.
Diversification Opportunities for Mainstay High and Mainstay Tax
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mainstay and Mainstay is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay High Yield and Mainstay Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Tax Free and Mainstay High 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 High Yield are associated (or correlated) with Mainstay Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Tax Free has no effect on the direction of Mainstay High i.e., Mainstay High and Mainstay Tax go up and down completely randomly.
Pair Corralation between Mainstay High and Mainstay Tax
Assuming the 90 days horizon Mainstay High is expected to generate 1.96 times less return on investment than Mainstay Tax. But when comparing it to its historical volatility, Mainstay High Yield is 1.76 times less risky than Mainstay Tax. It trades about 0.15 of its potential returns per unit of risk. Mainstay Tax Free is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 932.00 in Mainstay Tax Free on August 29, 2024 and sell it today you would earn a total of 11.00 from holding Mainstay Tax Free or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Mainstay High Yield vs. Mainstay Tax Free
Performance |
| Timeline |
| Mainstay High Yield |
| Mainstay Tax Free |
Mainstay High and Mainstay Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay High and Mainstay Tax
The main advantage of trading using opposite Mainstay High and Mainstay Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay High position performs unexpectedly, Mainstay Tax 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 Mainstay Tax will offset losses from the drop in Mainstay Tax's long position.| Mainstay High vs. Transamerica Intermediate Muni | Mainstay High vs. Nuveen Massachusetts Municipal | Mainstay High vs. Gamco Global Telecommunications | Mainstay High vs. Federated Government Ultrashort |
| Mainstay Tax vs. Victory High Yield | Mainstay Tax vs. Ambrus Core Bond | Mainstay Tax vs. Touchstone Premium Yield | Mainstay Tax vs. Multisector Bond Sma |
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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