Can any of the company-specific risk be diversified away by investing in both Mainstay High and Mainstay Income 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 Mainstay Income 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 Mainstay Income Builder, you can compare the effects of market volatilities on Mainstay High and Mainstay Income 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 Mainstay Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay High and Mainstay Income.
Diversification Opportunities for Mainstay High and Mainstay Income
The 3 months correlation between Mainstay and Mainstay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay High Yield and Mainstay Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Income Builder 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 Mainstay Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Income Builder has no effect on the direction of Mainstay High i.e., Mainstay High and Mainstay Income go up and down completely randomly.
Pair Corralation between Mainstay High and Mainstay Income
If you would invest (100.00) in Mainstay Income Builder on March 5, 2024 and sell it today you would earn a total of 100.00 from holding Mainstay Income Builder or generate -100.0% return on investment over 90 days.
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.
Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Income Builder are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mainstay Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.