Correlation Between Mainstay High and Columbia Convertible
Can any of the company-specific risk be diversified away by investing in both Mainstay High and Columbia 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 High and Columbia Convertible 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 Columbia Convertible Securities, you can compare the effects of market volatilities on Mainstay High and Columbia 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 High with a short position of Columbia Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay High and Columbia Convertible.
Diversification Opportunities for Mainstay High and Columbia Convertible
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and Columbia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay High Yield and Columbia Convertible Securitie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Convertible 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 Columbia Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Convertible has no effect on the direction of Mainstay High i.e., Mainstay High and Columbia Convertible go up and down completely randomly.
Pair Corralation between Mainstay High and Columbia Convertible
Assuming the 90 days horizon Mainstay High is expected to generate 1.59 times less return on investment than Columbia Convertible. But when comparing it to its historical volatility, Mainstay High Yield is 3.86 times less risky than Columbia Convertible. It trades about 0.35 of its potential returns per unit of risk. Columbia Convertible Securities is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,187 in Columbia Convertible Securities on October 20, 2024 and sell it today you would earn a total of 40.00 from holding Columbia Convertible Securities or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay High Yield vs. Columbia Convertible Securitie
Performance |
| Timeline |
| Mainstay High Yield |
| Columbia Convertible |
Mainstay High and Columbia Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay High and Columbia Convertible
The main advantage of trading using opposite Mainstay High and Columbia Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay High position performs unexpectedly, Columbia 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 Columbia Convertible will offset losses from the drop in Columbia Convertible's long position.| Mainstay High vs. Columbia Convertible Securities | Mainstay High vs. Fidelity Vertible Securities | Mainstay High vs. Lord Abbett Vertible | Mainstay High vs. Absolute Convertible Arbitrage |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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