Correlation Between Mainstay Convertible and Aberdeen Tax

Can any of the company-specific risk be diversified away by investing in both Mainstay Convertible and Aberdeen Tax 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 Aberdeen Tax 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 Aberdeen Tax Free Incm, you can compare the effects of market volatilities on Mainstay Convertible and Aberdeen Tax 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 Aberdeen Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Convertible and Aberdeen Tax.

Diversification Opportunities for Mainstay Convertible and Aberdeen Tax

0.79

Correlation Coefficient

Mainstay Convertible  Aberdeen Tax

Poor diversification

The 3 months correlation between Mainstay and Aberdeen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and Aberdeen Tax Free Incm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Tax Free 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 Aberdeen Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Tax Free has no effect on the direction of Mainstay Convertible i.e., Mainstay Convertible and Aberdeen Tax go up and down completely randomly.

Pair Corralation between Mainstay Convertible and Aberdeen Tax

Assuming the 90 days horizon Mainstay Vertible Fund is expected to under-perform the Aberdeen Tax. In addition to that, Mainstay Convertible is 2.65 times more volatile than Aberdeen Tax Free Incm. It trades about -0.27 of its total potential returns per unit of risk. Aberdeen Tax Free Incm is currently generating about -0.39 per unit of volatility. If you would invest  902.00  in Aberdeen Tax Free Incm on October 11, 2024 and sell it today you would lose (18.00) from holding Aberdeen Tax Free Incm or give up 2.0% of portfolio value over 90 days.

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

Mainstay Vertible Fund  vs.  Aberdeen Tax Free Incm

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.

Aberdeen Tax Free

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mainstay Convertible and Aberdeen Tax

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

The idea behind Mainstay Vertible Fund and Aberdeen Tax Free Incm 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.