Correlation Between Short-term Government and Mainstay High
Can any of the company-specific risk be diversified away by investing in both Short-term Government 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 Short-term Government and Mainstay High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Term Government Fund and Mainstay High Yield, you can compare the effects of market volatilities on Short-term Government 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 Short-term Government with a short position of Mainstay High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Government and Mainstay High.
Diversification Opportunities for Short-term Government and Mainstay High
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Short-term and Mainstay is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government Fund 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 Short-term Government 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 Short Term Government Fund 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 Short-term Government i.e., Short-term Government and Mainstay High go up and down completely randomly.
Pair Corralation between Short-term Government and Mainstay High
Assuming the 90 days horizon Short Term Government Fund is expected to generate 0.3 times more return on investment than Mainstay High. However, Short Term Government Fund is 3.38 times less risky than Mainstay High. It trades about 0.05 of its potential returns per unit of risk. Mainstay High Yield is currently generating about -0.06 per unit of risk. If you would invest 902.00 in Short Term Government Fund on October 21, 2024 and sell it today you would earn a total of 3.00 from holding Short Term Government Fund or generate 0.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Short Term Government Fund vs. Mainstay High Yield
Performance |
Timeline |
Short Term Government |
Mainstay High Yield |
Short-term Government and Mainstay High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Short-term Government and Mainstay High
The main advantage of trading using opposite Short-term Government and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-term Government 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.Short-term Government vs. Goldman Sachs Short | ||
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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