Correlation Between Mainstay Unconstrained and Shelton Emerging

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Can any of the company-specific risk be diversified away by investing in both Mainstay Unconstrained and Shelton Emerging 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 Unconstrained and Shelton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Unconstrained Bond and Shelton Emerging Markets, you can compare the effects of market volatilities on Mainstay Unconstrained and Shelton Emerging 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 Unconstrained with a short position of Shelton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Unconstrained and Shelton Emerging.

Diversification Opportunities for Mainstay Unconstrained and Shelton Emerging

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Mainstay and Shelton is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Unconstrained Bond and Shelton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton Emerging Markets and Mainstay Unconstrained 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 Unconstrained Bond are associated (or correlated) with Shelton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton Emerging Markets has no effect on the direction of Mainstay Unconstrained i.e., Mainstay Unconstrained and Shelton Emerging go up and down completely randomly.

Pair Corralation between Mainstay Unconstrained and Shelton Emerging

Assuming the 90 days horizon Mainstay Unconstrained Bond is expected to generate 0.29 times more return on investment than Shelton Emerging. However, Mainstay Unconstrained Bond is 3.41 times less risky than Shelton Emerging. It trades about 0.11 of its potential returns per unit of risk. Shelton Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest  793.00  in Mainstay Unconstrained Bond on October 5, 2024 and sell it today you would earn a total of  66.00  from holding Mainstay Unconstrained Bond or generate 8.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.63%
ValuesDaily Returns

Mainstay Unconstrained Bond  vs.  Shelton Emerging Markets

 Performance 
       Timeline  
Mainstay Unconstrained 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Mainstay Unconstrained Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Mainstay Unconstrained is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Shelton Emerging Markets 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shelton Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Mainstay Unconstrained and Shelton Emerging Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mainstay Unconstrained and Shelton Emerging

The main advantage of trading using opposite Mainstay Unconstrained and Shelton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Unconstrained position performs unexpectedly, Shelton Emerging 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 Shelton Emerging will offset losses from the drop in Shelton Emerging's long position.
The idea behind Mainstay Unconstrained Bond and Shelton Emerging Markets 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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