Correlation Between Mainstay Convertible and Blackrock Advantage

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

By analyzing existing cross correlation between Mainstay Vertible Fund and Blackrock Advantage Esg, you can compare the effects of market volatilities on Mainstay Convertible and Blackrock Advantage 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 Mainstay Convertible with a short position of Blackrock Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Convertible and Blackrock Advantage.

Diversification Opportunities for Mainstay Convertible and Blackrock Advantage

0.49

Correlation Coefficient

Mainstay Convertible  Blackrock Advantage

Very weak diversification

The 3 months correlation between Mainstay and Blackrock is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and Blackrock Advantage Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Advantage Esg and Mainstay Convertible 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 Mainstay Vertible Fund are associated (or correlated) with Blackrock Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Advantage Esg has no effect on the direction of Mainstay Convertible i.e., Mainstay Convertible and Blackrock Advantage go up and down completely randomly.

Pair Corralation between Mainstay Convertible and Blackrock Advantage

Assuming the 90 days horizon Mainstay Vertible Fund is expected to under-perform the Blackrock Advantage. In addition to that, Mainstay Convertible is 1.01 times more volatile than Blackrock Advantage Esg. It trades about -0.31 of its total potential returns per unit of risk. Blackrock Advantage Esg is currently generating about -0.28 per unit of volatility. If you would invest  1,178  in Blackrock Advantage Esg on October 10, 2024 and sell it today you would lose (65.00) from holding Blackrock Advantage Esg or give up 5.52% of portfolio value over 90 days.

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

Mainstay Vertible Fund  vs.  Blackrock Advantage Esg

Mainstay Convertible

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Advantage Esg

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mainstay Convertible and Blackrock Advantage

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

The idea behind Mainstay Vertible Fund and Blackrock Advantage Esg 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.