Correlation Between Champlain Small and Mainstay High

Can any of the company-specific risk be diversified away by investing in both Champlain Small 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 Champlain Small and Mainstay High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champlain Small and Mainstay High Yield, you can compare the effects of market volatilities on Champlain Small 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 Champlain Small with a short position of Mainstay High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Mainstay High.

Diversification Opportunities for Champlain Small and Mainstay High

-0.5

Correlation Coefficient

Champlain Small  Mainstay High

Very good diversification

The 3 months correlation between Champlain and Mainstay is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small 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 Champlain Small 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 Champlain Small 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 Champlain Small i.e., Champlain Small and Mainstay High go up and down completely randomly.

Pair Corralation between Champlain Small and Mainstay High

Assuming the 90 days horizon Champlain Small is expected to under-perform the Mainstay High. In addition to that, Champlain Small is 7.41 times more volatile than Mainstay High Yield. It trades about -0.1 of its total potential returns per unit of risk. Mainstay High Yield is currently generating about 0.26 per unit of volatility. If you would invest  514.00  in Mainstay High Yield on December 22, 2024 and sell it today you would earn a total of  8.00  from holding Mainstay High Yield or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

Champlain Small  vs.  Mainstay High Yield

Champlain Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champlain Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Mainstay High Yield

Risk-Adjusted Performance

Solid

Over the last 90 days Mainstay High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Mainstay High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Champlain Small and Mainstay High

The main advantage of trading using opposite Champlain Small and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small 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 Champlain Small 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.