Correlation Between Queens Road and Mainstay High

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

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

Diversification Opportunities for Queens Road and Mainstay High

0.7

Correlation Coefficient

Queens Road  Mainstay High

Poor diversification

The 3 months correlation between Queens and Mainstay is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Queens Road Small 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 Queens Road 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 Queens Road Small 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 Queens Road i.e., Queens Road and Mainstay High go up and down completely randomly.

Pair Corralation between Queens Road and Mainstay High

Assuming the 90 days horizon Queens Road Small is expected to generate 3.27 times more return on investment than Mainstay High. However, Queens Road is 3.27 times more volatile than Mainstay High Yield. It trades about 0.02 of its potential returns per unit of risk. Mainstay High Yield is currently generating about 0.01 per unit of risk. If you would invest  4,011  in Queens Road Small on October 26, 2024 and sell it today you would earn a total of  48.00  from holding Queens Road Small or generate 1.2% return on investment over 90 days.

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

Queens Road Small  vs.  Mainstay High Yield

Queens Road Small

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Queens Road Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Queens Road 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

0 of 100

Very Weak

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 basic 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 Queens Road and Mainstay High

The main advantage of trading using opposite Queens Road and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Queens Road 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 Queens Road Small 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.