Correlation Between Capital Income and Mainstay Growth
Can any of the company-specific risk be diversified away by investing in both Capital Income and Mainstay Growth 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 Capital Income and Mainstay Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and Mainstay Growth Allocation, you can compare the effects of market volatilities on Capital Income and Mainstay Growth 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 Capital Income with a short position of Mainstay Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Mainstay Growth.
Diversification Opportunities for Capital Income and Mainstay Growth
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Mainstay is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Mainstay Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Growth Allo and Capital Income 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 Capital Income Builder are associated (or correlated) with Mainstay Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Growth Allo has no effect on the direction of Capital Income i.e., Capital Income and Mainstay Growth go up and down completely randomly.
Pair Corralation between Capital Income and Mainstay Growth
Assuming the 90 days horizon Capital Income is expected to generate 1.22 times less return on investment than Mainstay Growth. But when comparing it to its historical volatility, Capital Income Builder is 1.34 times less risky than Mainstay Growth. It trades about 0.26 of its potential returns per unit of risk. Mainstay Growth Allocation is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,622 in Mainstay Growth Allocation on November 3, 2024 and sell it today you would earn a total of 59.00 from holding Mainstay Growth Allocation or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. Mainstay Growth Allocation
Performance |
| Timeline |
| Capital Income Builder |
| Mainstay Growth Allo |
Capital Income and Mainstay Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Mainstay Growth
The main advantage of trading using opposite Capital Income and Mainstay Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Mainstay Growth 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 Growth will offset losses from the drop in Mainstay Growth's long position.| Capital Income vs. Dws Global Macro | Capital Income vs. Rbb Fund | Capital Income vs. Kinetics Global Fund | Capital Income vs. Ms Global Fixed |
| Mainstay Growth vs. Blackrock Moderate Prepared | Mainstay Growth vs. Wilmington Trust Retirement | Mainstay Growth vs. Franklin Lifesmart Retirement | Mainstay Growth vs. Columbia Moderate Growth |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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