Correlation Between Dow Jones and Mainstay Income
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Mainstay Income 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 Dow Jones and Mainstay Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Mainstay Income Builder, you can compare the effects of market volatilities on Dow Jones and Mainstay Income 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 Dow Jones with a short position of Mainstay Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Mainstay Income.
Diversification Opportunities for Dow Jones and Mainstay Income
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Mainstay is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Mainstay Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Income Builder and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Mainstay Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Income Builder has no effect on the direction of Dow Jones i.e., Dow Jones and Mainstay Income go up and down completely randomly.
Pair Corralation between Dow Jones and Mainstay Income
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.32 times more return on investment than Mainstay Income. However, Dow Jones is 1.32 times more volatile than Mainstay Income Builder. It trades about 0.08 of its potential returns per unit of risk. Mainstay Income Builder is currently generating about 0.09 per unit of risk. If you would invest 3,279,840 in Dow Jones Industrial on November 27, 2024 and sell it today you would earn a total of 1,066,281 from holding Dow Jones Industrial or generate 32.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Dow Jones Industrial vs. Mainstay Income Builder
Performance |
| Timeline |
Dow Jones and Mainstay Income Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Mainstay Income Builder
Pair trading matchups for Mainstay Income
Pair Trading with Dow Jones and Mainstay Income
The main advantage of trading using opposite Dow Jones and Mainstay Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Mainstay Income 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 Income will offset losses from the drop in Mainstay Income's long position.The idea behind Dow Jones Industrial and Mainstay Income Builder 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.| Mainstay Income vs. Jpmorgan Large Cap | Mainstay Income vs. Lord Abbett Affiliated | Mainstay Income vs. Neiman Large Cap | Mainstay Income vs. Ab Large Cap |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |