Correlation Between Mainstay High and Mainstay
Can any of the company-specific risk be diversified away by investing in both Mainstay High and Mainstay 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 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 Sp 500, you can compare the effects of market volatilities on Mainstay High and Mainstay 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay High and Mainstay.
Diversification Opportunities for Mainstay High and Mainstay
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mainstay and Mainstay is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay High Yield and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Mainstay High i.e., Mainstay High and Mainstay go up and down completely randomly.
Pair Corralation between Mainstay High and Mainstay
Assuming the 90 days horizon Mainstay High is expected to generate 11.52 times less return on investment than Mainstay. But when comparing it to its historical volatility, Mainstay High Yield is 4.44 times less risky than Mainstay. It trades about 0.06 of its potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6,399 in Mainstay Sp 500 on August 29, 2024 and sell it today you would earn a total of 294.00 from holding Mainstay Sp 500 or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Mainstay High Yield vs. Mainstay Sp 500
Performance |
| Timeline |
| Mainstay High Yield |
| Mainstay Sp 500 |
Mainstay High and Mainstay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay High and Mainstay
The main advantage of trading using opposite Mainstay High and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay High position performs unexpectedly, Mainstay 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 will offset losses from the drop in Mainstay'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 vs. Ab Bond Inflation | Mainstay vs. Touchstone Sands Capital | Mainstay vs. T Rowe Price | Mainstay vs. Artisan Emerging Markets |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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