Correlation Between California Bond and Mainstay High
Can any of the company-specific risk be diversified away by investing in both California Bond 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 California Bond and Mainstay High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Mainstay High Yield, you can compare the effects of market volatilities on California Bond 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 California Bond with a short position of Mainstay High. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Mainstay High.
Diversification Opportunities for California Bond and Mainstay High
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and Mainstay is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund 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 California Bond 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 California Bond Fund 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 California Bond i.e., California Bond and Mainstay High go up and down completely randomly.
Pair Corralation between California Bond and Mainstay High
Assuming the 90 days horizon California Bond Fund is expected to generate 0.88 times more return on investment than Mainstay High. However, California Bond Fund is 1.14 times less risky than Mainstay High. It trades about 0.22 of its potential returns per unit of risk. Mainstay High Yield is currently generating about 0.19 per unit of risk. If you would invest 1,035 in California Bond Fund on September 1, 2024 and sell it today you would earn a total of 16.00 from holding California Bond Fund or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
California Bond Fund vs. Mainstay High Yield
Performance |
| Timeline |
| California Bond |
| Mainstay High Yield |
California Bond and Mainstay High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Mainstay High
The main advantage of trading using opposite California Bond and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond 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.| California Bond vs. Income Fund Income | California Bond vs. Usaa Nasdaq 100 | California Bond vs. Intermediate Term Bond Fund | California Bond vs. Usaa Intermediate Term |
| Mainstay High vs. Mainstay Tax Free | Mainstay High vs. Mainstay Large Cap | Mainstay High vs. Mainstay Large Cap | Mainstay High 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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