Correlation Between Vanguard High-yield and Mainstay High
Can any of the company-specific risk be diversified away by investing in both Vanguard High-yield 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 Vanguard High-yield and Mainstay High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard High Yield Corporate and Mainstay High Yield, you can compare the effects of market volatilities on Vanguard High-yield 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 Vanguard High-yield with a short position of Mainstay High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High-yield and Mainstay High.
Diversification Opportunities for Vanguard High-yield and Mainstay High
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Mainstay is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Corporate 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 Vanguard High-yield 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 Vanguard High Yield Corporate 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 Vanguard High-yield i.e., Vanguard High-yield and Mainstay High go up and down completely randomly.
Pair Corralation between Vanguard High-yield and Mainstay High
Assuming the 90 days horizon Vanguard High Yield Corporate is expected to generate 0.8 times more return on investment than Mainstay High. However, Vanguard High Yield Corporate is 1.25 times less risky than Mainstay High. It trades about 0.18 of its potential returns per unit of risk. Mainstay High Yield is currently generating about 0.1 per unit of risk. If you would invest 545.00 in Vanguard High Yield Corporate on September 2, 2024 and sell it today you would earn a total of 3.00 from holding Vanguard High Yield Corporate or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard High Yield Corporate vs. Mainstay High Yield
Performance |
| Timeline |
| Vanguard High Yield |
| Mainstay High Yield |
Vanguard High-yield and Mainstay High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High-yield and Mainstay High
The main advantage of trading using opposite Vanguard High-yield and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High-yield 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 Vanguard High Yield Corporate 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. Mainstay Tax Free | Mainstay High vs. Mainstay Income Builder | 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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