Correlation Between Mainstay High and Rationalpier

Can any of the company-specific risk be diversified away by investing in both Mainstay High and Rationalpier 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 Rationalpier 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 Rationalpier 88 Convertible, you can compare the effects of market volatilities on Mainstay High and Rationalpier 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 Rationalpier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay High and Rationalpier.

Diversification Opportunities for Mainstay High and Rationalpier

0.68

Correlation Coefficient

Mainstay High  Rationalpier

Poor diversification

The 3 months correlation between Mainstay and Rationalpier is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay High Yield and Rationalpier 88 Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rationalpier 88 Conv 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 Rationalpier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rationalpier 88 Conv has no effect on the direction of Mainstay High i.e., Mainstay High and Rationalpier go up and down completely randomly.

Pair Corralation between Mainstay High and Rationalpier

Assuming the 90 days horizon Mainstay High Yield is expected to generate 0.41 times more return on investment than Rationalpier. However, Mainstay High Yield is 2.43 times less risky than Rationalpier. It trades about 0.22 of its potential returns per unit of risk. Rationalpier 88 Convertible is currently generating about 0.08 per unit of risk. If you would invest  510.00  in Mainstay High Yield on February 18, 2024 and sell it today you would earn a total of  11.00  from holding Mainstay High Yield or generate 2.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Mainstay High Yield  vs.  Rationalpier 88 Convertible

Mainstay High Yield

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay High Yield are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mainstay High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rationalpier 88 Conv

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rationalpier 88 Convertible are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Rationalpier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mainstay High and Rationalpier

The main advantage of trading using opposite Mainstay High and Rationalpier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay High position performs unexpectedly, Rationalpier 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 Rationalpier will offset losses from the drop in Rationalpier's long position.

The idea behind Mainstay High Yield and Rationalpier 88 Convertible 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 Stocks Directory module to find actively traded stocks across global markets.