Correlation Between T Rowe and Mainstay Mackay
Can any of the company-specific risk be diversified away by investing in both T Rowe and Mainstay Mackay 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 Mackay 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 Mackay Short, you can compare the effects of market volatilities on T Rowe and Mainstay Mackay 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 Mackay. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Mainstay Mackay.
Diversification Opportunities for T Rowe and Mainstay Mackay
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PATFX and Mainstay is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Mainstay Mackay Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Mackay Short 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 Mackay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Mackay Short has no effect on the direction of T Rowe i.e., T Rowe and Mainstay Mackay go up and down completely randomly.
Pair Corralation between T Rowe and Mainstay Mackay
Assuming the 90 days horizon T Rowe Price is expected to generate 2.26 times more return on investment than Mainstay Mackay. However, T Rowe is 2.26 times more volatile than Mainstay Mackay Short. It trades about 0.21 of its potential returns per unit of risk. Mainstay Mackay Short is currently generating about 0.17 per unit of risk. If you would invest 990.00 in T Rowe Price on September 1, 2024 and sell it today you would earn a total of 149.00 from holding T Rowe Price or generate 15.05% 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 Mackay Short
Performance |
| Timeline |
| T Rowe Price |
| Mainstay Mackay Short |
T Rowe and Mainstay Mackay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Mainstay Mackay
The main advantage of trading using opposite T Rowe and Mainstay Mackay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Mainstay Mackay 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 Mackay will offset losses from the drop in Mainstay Mackay's long position.The idea behind T Rowe Price and Mainstay Mackay Short 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 Mackay vs. Mainstay High Yield | Mainstay Mackay vs. Mainstay Tax Free | Mainstay Mackay vs. Mainstay Income Builder | Mainstay Mackay vs. Mainstay Large Cap |
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 Stocks Directory module to find actively traded stocks across global markets.
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