Correlation Between T Rowe and Mainstay High
Can any of the company-specific risk be diversified away by investing in both T Rowe and Mainstay High 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 T Rowe and Mainstay High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Mainstay High Yield, you can compare the effects of market volatilities on T Rowe and Mainstay High 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 T Rowe with a short position of Mainstay High. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Mainstay High.
Diversification Opportunities for T Rowe and Mainstay High
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PARKX and Mainstay is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Mainstay High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay High Yield and T Rowe 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 T Rowe Price are associated (or correlated) with Mainstay High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay High Yield has no effect on the direction of T Rowe i.e., T Rowe and Mainstay High go up and down completely randomly.
Pair Corralation between T Rowe and Mainstay High
Assuming the 90 days horizon T Rowe Price is expected to generate 2.7 times more return on investment than Mainstay High. However, T Rowe is 2.7 times more volatile than Mainstay High Yield. It trades about 0.09 of its potential returns per unit of risk. Mainstay High Yield is currently generating about 0.12 per unit of risk. If you would invest 1,676 in T Rowe Price on September 3, 2024 and sell it today you would earn a total of 535.00 from holding T Rowe Price or generate 31.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. Mainstay High Yield
Performance |
| Timeline |
| T Rowe Price |
| Mainstay High Yield |
T Rowe and Mainstay High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Mainstay High
The main advantage of trading using opposite T Rowe and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Mainstay High 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 High will offset losses from the drop in Mainstay High's long position.The idea behind T Rowe Price and Mainstay High Yield pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mainstay High vs. T Rowe Price | Mainstay High vs. T Rowe Price | Mainstay High vs. T Rowe Price | Mainstay High vs. T Rowe Price |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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