Correlation Between Mainstay High and T Rowe
Can any of the company-specific risk be diversified away by investing in both Mainstay High and T Rowe 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 T Rowe 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 T Rowe Price, you can compare the effects of market volatilities on Mainstay High and T Rowe 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 T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay High and T Rowe.
Diversification Opportunities for Mainstay High and T Rowe
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and RRTLX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay High Yield and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Mainstay High i.e., Mainstay High and T Rowe go up and down completely randomly.
Pair Corralation between Mainstay High and T Rowe
Assuming the 90 days horizon Mainstay High is expected to generate 1.39 times less return on investment than T Rowe. But when comparing it to its historical volatility, Mainstay High Yield is 2.14 times less risky than T Rowe. It trades about 0.18 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,200 in T Rowe Price on August 31, 2024 and sell it today you would earn a total of 63.00 from holding T Rowe Price or generate 5.25% 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. T Rowe Price
Performance |
| Timeline |
| Mainstay High Yield |
| T Rowe Price |
Mainstay High and T Rowe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay High and T Rowe
The main advantage of trading using opposite Mainstay High and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay High position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.| Mainstay High vs. Vanguard High Yield Corporate | Mainstay High vs. Vanguard High Yield Porate | Mainstay High vs. Blackrock Hi Yld | Mainstay High vs. Blackrock High Yield |
| T Rowe vs. Prudential Jennison International | T Rowe vs. Fidelity New Markets | T Rowe vs. Ohio Variable College |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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