Correlation Between American Century and Mainstay Large
Can any of the company-specific risk be diversified away by investing in both American Century and Mainstay Large 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 American Century and Mainstay Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century California and Mainstay Large Cap, you can compare the effects of market volatilities on American Century and Mainstay Large 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 American Century with a short position of Mainstay Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Mainstay Large.
Diversification Opportunities for American Century and Mainstay Large
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Mainstay is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding American Century California and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap and American Century 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 American Century California are associated (or correlated) with Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of American Century i.e., American Century and Mainstay Large go up and down completely randomly.
Pair Corralation between American Century and Mainstay Large
Assuming the 90 days horizon American Century is expected to generate 9.21 times less return on investment than Mainstay Large. But when comparing it to its historical volatility, American Century California is 2.86 times less risky than Mainstay Large. It trades about 0.03 of its potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 714.00 in Mainstay Large Cap on August 30, 2024 and sell it today you would earn a total of 432.00 from holding Mainstay Large Cap or generate 60.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
American Century California vs. Mainstay Large Cap
Performance |
| Timeline |
| American Century Cal |
| Mainstay Large Cap |
American Century and Mainstay Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Mainstay Large
The main advantage of trading using opposite American Century and Mainstay Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Mainstay Large 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 Large will offset losses from the drop in Mainstay Large's long position.| American Century vs. Maryland Short Term Tax Free | American Century vs. Barings Active Short | American Century vs. Touchstone Ultra Short | American Century vs. Quantitative Longshort Equity |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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