Correlation Between Mainstay Convertible and Tax-free Conservative

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

Diversification Opportunities for Mainstay Convertible and Tax-free Conservative

MainstayTax-FreeDiversified AwayMainstayTax-FreeDiversified Away100%
-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Mainstay and Tax-Free is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and Tax Free Conservative Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Free Conservative 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 Tax-free Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Free Conservative has no effect on the direction of Mainstay Convertible i.e., Mainstay Convertible and Tax-free Conservative go up and down completely randomly.

Pair Corralation between Mainstay Convertible and Tax-free Conservative

Assuming the 90 days horizon Mainstay Vertible Fund is expected to generate 8.7 times more return on investment than Tax-free Conservative. However, Mainstay Convertible is 8.7 times more volatile than Tax Free Conservative Income. It trades about 0.07 of its potential returns per unit of risk. Tax Free Conservative Income is currently generating about 0.21 per unit of risk. If you would invest  1,748  in Mainstay Vertible Fund on October 27, 2024 and sell it today you would earn a total of  169.00  from holding Mainstay Vertible Fund or generate 9.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mainstay Vertible Fund  vs.  Tax Free Conservative Income

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -3-2-1012
JavaScript chart by amCharts 3.21.15MCOAX TFCAX
       Timeline  
Mainstay Convertible 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Vertible Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan18.81919.219.419.619.8
Tax Free Conservative 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Tax Free Conservative Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax-free Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan9.939.949.959.969.979.989.9910

Mainstay Convertible and Tax-free Conservative Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.66-1.24-0.82-0.4-0.02090.330.751.171.592.01 20406080100120140
JavaScript chart by amCharts 3.21.15MCOAX TFCAX
       Returns  

Pair Trading with Mainstay Convertible and Tax-free Conservative

The main advantage of trading using opposite Mainstay Convertible and Tax-free Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Convertible position performs unexpectedly, Tax-free Conservative 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 Tax-free Conservative will offset losses from the drop in Tax-free Conservative's long position.
The idea behind Mainstay Vertible Fund and Tax Free Conservative Income 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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