Correlation Between Mainstay High and Gmo High
Can any of the company-specific risk be diversified away by investing in both Mainstay High and Gmo 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 High and Gmo High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay High Yield and Gmo High Yield, you can compare the effects of market volatilities on Mainstay High and Gmo 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 High with a short position of Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay High and Gmo High.
Diversification Opportunities for Mainstay High and Gmo High
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mainstay and Gmo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay High Yield and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield and Mainstay High 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 High Yield are associated (or correlated) with Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Mainstay High i.e., Mainstay High and Gmo High go up and down completely randomly.
Pair Corralation between Mainstay High and Gmo High
Assuming the 90 days horizon Mainstay High Yield is expected to generate 0.94 times more return on investment than Gmo High. However, Mainstay High Yield is 1.07 times less risky than Gmo High. It trades about -0.15 of its potential returns per unit of risk. Gmo High Yield is currently generating about -0.32 per unit of risk. If you would invest 512.00 in Mainstay High Yield on January 20, 2024 and sell it today you would lose (4.00) from holding Mainstay High Yield or give up 0.78% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Mainstay High Yield vs. Gmo High Yield
Performance |
Timeline |
Mainstay High Yield |
Gmo High Yield |
Mainstay High and Gmo High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mainstay High and Gmo High
The main advantage of trading using opposite Mainstay High and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay High position performs unexpectedly, Gmo 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 Gmo High will offset losses from the drop in Gmo High's long position.Mainstay High vs. Mainstay Tax Free | Mainstay High vs. Mainstay Income Builder | Mainstay High vs. Mainstay Large Cap | Mainstay High vs. Mainstay Large Cap |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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