Correlation Between Mainstay Convertible and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Mainstay Convertible and Gmo Emerging 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 Convertible and Gmo Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Vertible Fund and Gmo Emerging Markets, you can compare the effects of market volatilities on Mainstay Convertible and Gmo Emerging 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 Convertible with a short position of Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Convertible and Gmo Emerging.
Diversification Opportunities for Mainstay Convertible and Gmo Emerging
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mainstay and Gmo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets and Mainstay Convertible 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 Vertible Fund are associated (or correlated) with Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Mainstay Convertible i.e., Mainstay Convertible and Gmo Emerging go up and down completely randomly.
Pair Corralation between Mainstay Convertible and Gmo Emerging
Assuming the 90 days horizon Mainstay Convertible is expected to generate 1.8 times less return on investment than Gmo Emerging. But when comparing it to its historical volatility, Mainstay Vertible Fund is 1.81 times less risky than Gmo Emerging. It trades about 0.23 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,548 in Gmo Emerging Markets on June 3, 2025 and sell it today you would earn a total of 279.00 from holding Gmo Emerging Markets or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Vertible Fund vs. Gmo Emerging Markets
Performance |
| Timeline |
| Mainstay Convertible |
| Gmo Emerging Markets |
Mainstay Convertible and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Convertible and Gmo Emerging
The main advantage of trading using opposite Mainstay Convertible and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Convertible position performs unexpectedly, Gmo Emerging 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 Emerging will offset losses from the drop in Gmo Emerging's long position.The idea behind Mainstay Vertible Fund and Gmo Emerging Markets 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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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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