Correlation Between Mainstay High and Georgia Tax-free
Can any of the company-specific risk be diversified away by investing in both Mainstay High and Georgia Tax-free 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 High and Georgia Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay High Yield and Georgia Tax Free Bond, you can compare the effects of market volatilities on Mainstay High and Georgia Tax-free 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 High with a short position of Georgia Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay High and Georgia Tax-free.
Diversification Opportunities for Mainstay High and Georgia Tax-free
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mainstay and Georgia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay High Yield and Georgia Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Georgia Tax Free and Mainstay 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 Mainstay High Yield are associated (or correlated) with Georgia Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Georgia Tax Free has no effect on the direction of Mainstay High i.e., Mainstay High and Georgia Tax-free go up and down completely randomly.
Pair Corralation between Mainstay High and Georgia Tax-free
Assuming the 90 days horizon Mainstay High Yield is expected to generate 0.85 times more return on investment than Georgia Tax-free. However, Mainstay High Yield is 1.17 times less risky than Georgia Tax-free. It trades about -0.19 of its potential returns per unit of risk. Georgia Tax Free Bond is currently generating about -0.41 per unit of risk. If you would invest 525.00 in Mainstay High Yield on October 10, 2024 and sell it today you would lose (5.00) from holding Mainstay High Yield or give up 0.95% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Mainstay High Yield vs. Georgia Tax Free Bond
Performance |
Timeline |
Mainstay High Yield |
Georgia Tax Free |
Mainstay High and Georgia Tax-free Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mainstay High and Georgia Tax-free
The main advantage of trading using opposite Mainstay High and Georgia Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay High position performs unexpectedly, Georgia Tax-free 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 Georgia Tax-free will offset losses from the drop in Georgia Tax-free's long position.Mainstay High vs. Nexpoint Real Estate | Mainstay High vs. Jhancock Real Estate | Mainstay High vs. Real Estate Ultrasector | Mainstay High vs. Tiaa Cref Real Estate |
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Check out your portfolio center.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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