Correlation Between Inverse Government and Mainstay Large
Can any of the company-specific risk be diversified away by investing in both Inverse Government and Mainstay Large 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 Inverse Government and Mainstay Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Government Long and Mainstay Large Cap, you can compare the effects of market volatilities on Inverse Government and Mainstay Large 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 Inverse Government with a short position of Mainstay Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Government and Mainstay Large.
Diversification Opportunities for Inverse Government and Mainstay Large
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Inverse and Mainstay is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Government Long and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap and Inverse Government 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 Inverse Government Long are associated (or correlated) with Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of Inverse Government i.e., Inverse Government and Mainstay Large go up and down completely randomly.
Pair Corralation between Inverse Government and Mainstay Large
Assuming the 90 days horizon Inverse Government is expected to generate 1.48 times less return on investment than Mainstay Large. But when comparing it to its historical volatility, Inverse Government Long is 1.33 times less risky than Mainstay Large. It trades about 0.13 of its potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,373 in Mainstay Large Cap on August 26, 2024 and sell it today you would earn a total of 50.00 from holding Mainstay Large Cap or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Government Long vs. Mainstay Large Cap
Performance |
| Timeline |
| Inverse Government Long |
| Mainstay Large Cap |
Inverse Government and Mainstay Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Government and Mainstay Large
The main advantage of trading using opposite Inverse Government and Mainstay Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Government position performs unexpectedly, Mainstay Large 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 Large will offset losses from the drop in Mainstay Large's long position.| Inverse Government vs. Basic Materials Fund | Inverse Government vs. Banking Fund Class | Inverse Government vs. Sp Midcap 400 | Inverse Government vs. Biotechnology Fund Class |
| Mainstay Large vs. Lord Abbett Government | Mainstay Large vs. Fidelity Series Government | Mainstay Large vs. Dws Government Money | Mainstay Large vs. Inverse Government Long |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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