Correlation Between American Funds and Mainstay Balanced
Can any of the company-specific risk be diversified away by investing in both American Funds and Mainstay Balanced 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 Funds and Mainstay Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Mainstay Balanced Fund, you can compare the effects of market volatilities on American Funds and Mainstay Balanced 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 Funds with a short position of Mainstay Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Mainstay Balanced.
Diversification Opportunities for American Funds and Mainstay Balanced
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Mainstay is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Mainstay Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Balanced and American Funds 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 Funds American are associated (or correlated) with Mainstay Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Balanced has no effect on the direction of American Funds i.e., American Funds and Mainstay Balanced go up and down completely randomly.
Pair Corralation between American Funds and Mainstay Balanced
Assuming the 90 days horizon American Funds American is expected to generate 1.13 times more return on investment than Mainstay Balanced. However, American Funds is 1.13 times more volatile than Mainstay Balanced Fund. It trades about 0.1 of its potential returns per unit of risk. Mainstay Balanced Fund is currently generating about 0.07 per unit of risk. If you would invest 2,825 in American Funds American on August 31, 2024 and sell it today you would earn a total of 853.00 from holding American Funds American or generate 30.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Mainstay Balanced Fund
Performance |
| Timeline |
| American Funds American |
| Mainstay Balanced |
American Funds and Mainstay Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Mainstay Balanced
The main advantage of trading using opposite American Funds and Mainstay Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Mainstay Balanced 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 Balanced will offset losses from the drop in Mainstay Balanced's long position.| American Funds vs. American Funds American | American Funds vs. American Balanced | American Funds vs. American Balanced Fund | American Funds vs. American Balanced Fund |
| Mainstay Balanced vs. The Hartford Inflation | Mainstay Balanced vs. Nationwide Inflation Protected Securities | Mainstay Balanced vs. Aqr Managed Futures | Mainstay Balanced vs. Arrow Managed Futures |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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