Correlation Between Invesco High and Mainstay High
Can any of the company-specific risk be diversified away by investing in both Invesco High 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 Invesco High and Mainstay High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco High Yield and Mainstay High Yield, you can compare the effects of market volatilities on Invesco High 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 Invesco High with a short position of Mainstay High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and Mainstay High.
Diversification Opportunities for Invesco High and Mainstay High
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Mainstay is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Yield 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 Invesco 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 Invesco High Yield 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 Invesco High i.e., Invesco High and Mainstay High go up and down completely randomly.
Pair Corralation between Invesco High and Mainstay High
Assuming the 90 days horizon Invesco High Yield is expected to under-perform the Mainstay High. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco High Yield is 1.08 times less risky than Mainstay High. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Mainstay High Yield is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 515.00 in Mainstay High Yield on January 26, 2024 and sell it today you would lose (2.00) from holding Mainstay High Yield or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco High Yield vs. Mainstay High Yield
Performance |
| Timeline |
| Invesco High Yield |
| Mainstay High Yield |
Invesco High and Mainstay High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco High and Mainstay High
The main advantage of trading using opposite Invesco High and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco High 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 Invesco High Yield 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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