Correlation Between Mainstay Government and Dunham Porategovernment

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

Diversification Opportunities for Mainstay Government and Dunham Porategovernment

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Mainstay and Dunham is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding MAINSTAY GOVERNMENT FUND and DUNHAM PORATEGOVERNMENT BOND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment and Mainstay 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 Mainstay Government Fund are associated (or correlated) with Dunham Porategovernment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Porategovernment has no effect on the direction of Mainstay Government i.e., Mainstay Government and Dunham Porategovernment go up and down completely randomly.

Pair Corralation between Mainstay Government and Dunham Porategovernment

Assuming the 90 days horizon Mainstay Government Fund is expected to generate 1.12 times more return on investment than Dunham Porategovernment. However, Mainstay Government is 1.12 times more volatile than Dunham Porategovernment Bond. It trades about 0.21 of its potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about 0.21 per unit of risk. If you would invest  745.00  in Mainstay Government Fund on December 29, 2023 and sell it today you would earn a total of  10.00  from holding Mainstay Government Fund or generate 1.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

MAINSTAY GOVERNMENT FUND  vs.  DUNHAM PORATEGOVERNMENT BOND

 Performance 
       Timeline  
Mainstay Government Fund 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Government Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mainstay Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Dunham Porategovernment 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Dunham Porategovernment Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dunham Porategovernment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mainstay Government and Dunham Porategovernment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mainstay Government and Dunham Porategovernment

The main advantage of trading using opposite Mainstay Government and Dunham Porategovernment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Government position performs unexpectedly, Dunham Porategovernment 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 Dunham Porategovernment will offset losses from the drop in Dunham Porategovernment's long position.
The idea behind Mainstay Government Fund and Dunham Porategovernment Bond 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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