Correlation Between Mainstay Floating and Mainstay High

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

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

Diversification Opportunities for Mainstay Floating and Mainstay High

0.22

Correlation Coefficient

Mainstay Floating  Mainstay High

Modest diversification

The 3 months correlation between Mainstay and Mainstay is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Floating Rate and Mainstay High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay High Yield and Mainstay Floating 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 Floating Rate are associated (or correlated) with Mainstay High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay High Yield has no effect on the direction of Mainstay Floating i.e., Mainstay Floating and Mainstay High go up and down completely randomly.

Pair Corralation between Mainstay Floating and Mainstay High

Assuming the 90 days horizon Mainstay Floating Rate is expected to generate 0.77 times more return on investment than Mainstay High. However, Mainstay Floating Rate is 1.29 times less risky than Mainstay High. It trades about 0.09 of its potential returns per unit of risk. Mainstay High Yield is currently generating about 0.07 per unit of risk. If you would invest  879.00  in Mainstay Floating Rate on December 4, 2024 and sell it today you would earn a total of  6.00  from holding Mainstay Floating Rate or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.83%
Values	Daily Returns

Mainstay Floating Rate  vs.  Mainstay High Yield

Mainstay Floating Rate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Floating Rate are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mainstay Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mainstay High Yield

Risk-Adjusted Performance

Modest

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

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

The idea behind Mainstay Floating Rate and Mainstay 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.