Correlation Between Mainstay Total and Pace High

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

By analyzing existing cross correlation between Mainstay Total Return and Pace High Yield, you can compare the effects of market volatilities on Mainstay Total and Pace High 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 Total with a short position of Pace High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Total and Pace High.

Diversification Opportunities for Mainstay Total and Pace High

0.2

Correlation Coefficient

Mainstay Total  Pace High

Modest diversification

The 3 months correlation between Mainstay and Pace is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Total Return and Pace High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace High Yield and Mainstay Total 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 Total Return are associated (or correlated) with Pace High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace High Yield has no effect on the direction of Mainstay Total i.e., Mainstay Total and Pace High go up and down completely randomly.

Pair Corralation between Mainstay Total and Pace High

Assuming the 90 days horizon Mainstay Total Return is expected to under-perform the Pace High. In addition to that, Mainstay Total is 1.73 times more volatile than Pace High Yield. It trades about -0.32 of its total potential returns per unit of risk. Pace High Yield is currently generating about -0.28 per unit of volatility. If you would invest  900.00  in Pace High Yield on October 4, 2024 and sell it today you would lose (9.00) from holding Pace High Yield or give up 1.0% of portfolio value over 90 days.

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

Mainstay Total Return  vs.  Pace High Yield

Mainstay Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pace High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pace High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pace High 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 Total and Pace High

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

The idea behind Mainstay Total Return and Pace High Yield 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.