Correlation Between Pgim High and Mainstay Income

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

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

Diversification Opportunities for Pgim High and Mainstay Income

0.13

Correlation Coefficient

Pgim High  Mainstay Income

Average diversification

The 3 months correlation between Pgim and Mainstay is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pgim High Yield and Mainstay Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Income Builder and Pgim High 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 Pgim High Yield are associated (or correlated) with Mainstay Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Income Builder has no effect on the direction of Pgim High i.e., Pgim High and Mainstay Income go up and down completely randomly.

Pair Corralation between Pgim High and Mainstay Income

Considering the 90-day investment horizon Pgim High Yield is expected to generate 1.19 times more return on investment than Mainstay Income. However, Pgim High is 1.19 times more volatile than Mainstay Income Builder. It trades about 0.12 of its potential returns per unit of risk. Mainstay Income Builder is currently generating about 0.08 per unit of risk. If you would invest  1,069  in Pgim High Yield on October 4, 2024 and sell it today you would earn a total of  306.00  from holding Pgim High Yield or generate 28.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pgim High Yield  vs.  Mainstay Income Builder

Pgim High Yield

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim High Yield are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Pgim High is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Mainstay Income Builder

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pgim High and Mainstay Income

The main advantage of trading using opposite Pgim High and Mainstay Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pgim High position performs unexpectedly, Mainstay Income 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 Income will offset losses from the drop in Mainstay Income's long position.

The idea behind Pgim High Yield and Mainstay Income Builder 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.