Correlation Between Mainstay New and Invesco Convertible

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

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

Diversification Opportunities for Mainstay New and Invesco Convertible

0.02

Correlation Coefficient

Mainstay New  Invesco Convertible

Significant diversification

The 3 months correlation between Mainstay and Invesco is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay New York and Invesco Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Vertible Sec and Mainstay New 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 New York are associated (or correlated) with Invesco Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Vertible Sec has no effect on the direction of Mainstay New i.e., Mainstay New and Invesco Convertible go up and down completely randomly.

Pair Corralation between Mainstay New and Invesco Convertible

Assuming the 90 days horizon Mainstay New York is expected to generate 0.38 times more return on investment than Invesco Convertible. However, Mainstay New York is 2.65 times less risky than Invesco Convertible. It trades about 0.03 of its potential returns per unit of risk. Invesco Vertible Securities is currently generating about -0.05 per unit of risk. If you would invest  947.00  in Mainstay New York on December 22, 2024 and sell it today you would earn a total of  4.00  from holding Mainstay New York or generate 0.42% return on investment over 90 days.

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

Mainstay New York  vs.  Invesco Vertible Securities

Mainstay New York

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay New York 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 New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Vertible Sec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Vertible Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Invesco Convertible 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 New and Invesco Convertible

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

The idea behind Mainstay New York and Invesco Vertible Securities 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.