Correlation Between California Bond and Mainstay Epoch
Can any of the company-specific risk be diversified away by investing in both California Bond and Mainstay Epoch 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 Epoch 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 Epoch Small, you can compare the effects of market volatilities on California Bond and Mainstay Epoch 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 Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Mainstay Epoch.
Diversification Opportunities for California Bond and Mainstay Epoch
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Mainstay is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Mainstay Epoch Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Small 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 Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Small has no effect on the direction of California Bond i.e., California Bond and Mainstay Epoch go up and down completely randomly.
Pair Corralation between California Bond and Mainstay Epoch
Assuming the 90 days horizon California Bond is expected to generate 2.82 times less return on investment than Mainstay Epoch. But when comparing it to its historical volatility, California Bond Fund is 5.1 times less risky than Mainstay Epoch. It trades about 0.07 of its potential returns per unit of risk. Mainstay Epoch Small is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,260 in Mainstay Epoch Small on November 28, 2024 and sell it today you would earn a total of 190.00 from holding Mainstay Epoch Small or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Mainstay Epoch Small
Performance |
| Timeline |
| California Bond |
| Mainstay Epoch Small |
California Bond and Mainstay Epoch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Mainstay Epoch
The main advantage of trading using opposite California Bond and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Mainstay Epoch 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 Epoch will offset losses from the drop in Mainstay Epoch's long position.| California Bond vs. Vy Blackrock Inflation | California Bond vs. Simt Multi Asset Inflation | California Bond vs. Credit Suisse Multialternative | California Bond vs. Ab Bond Inflation |
| Mainstay Epoch vs. Ms Global Fixed | Mainstay Epoch vs. Artisan High Income | Mainstay Epoch vs. Rbc Bluebay Emerging | Mainstay Epoch vs. Multisector Bond Sma |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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