Correlation Between Mainstay High and California Bond
Can any of the company-specific risk be diversified away by investing in both Mainstay High and California Bond 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 California Bond 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 California Bond Fund, you can compare the effects of market volatilities on Mainstay High and California Bond 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 California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay High and California Bond.
Diversification Opportunities for Mainstay High and California Bond
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and California is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay High Yield and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond 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 California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Mainstay High i.e., Mainstay High and California Bond go up and down completely randomly.
Pair Corralation between Mainstay High and California Bond
Assuming the 90 days horizon Mainstay High is expected to generate 1.15 times less return on investment than California Bond. In addition to that, Mainstay High is 1.15 times more volatile than California Bond Fund. It trades about 0.21 of its total potential returns per unit of risk. California Bond Fund is currently generating about 0.27 per unit of volatility. If you would invest 1,030 in California Bond Fund on August 30, 2024 and sell it today you would earn a total of 21.00 from holding California Bond Fund or generate 2.04% 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. California Bond Fund
Performance |
| Timeline |
| Mainstay High Yield |
| California Bond |
Mainstay High and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay High and California Bond
The main advantage of trading using opposite Mainstay High and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay High position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Mainstay High vs. California Bond Fund | Mainstay High vs. Maryland Tax Free Bond | Mainstay High vs. Oklahoma Municipal Fund | Mainstay High vs. Ambrus Core Bond |
| California Bond vs. Strategic Allocation Aggressive | California Bond vs. Lgm Risk Managed | California Bond vs. Goldman Sachs High | California Bond vs. Ab Global Risk |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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