Correlation Between GM and Mainstay Mackay
Can any of the company-specific risk be diversified away by investing in both GM and Mainstay Mackay 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 GM and Mainstay Mackay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Mainstay Mackay Short, you can compare the effects of market volatilities on GM and Mainstay Mackay 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 GM with a short position of Mainstay Mackay. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mainstay Mackay.
Diversification Opportunities for GM and Mainstay Mackay
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Mainstay is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mainstay Mackay Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Mackay Short and GM 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 General Motors are associated (or correlated) with Mainstay Mackay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Mackay Short has no effect on the direction of GM i.e., GM and Mainstay Mackay go up and down completely randomly.
Pair Corralation between GM and Mainstay Mackay
Allowing for the 90-day total investment horizon General Motors is expected to generate 20.35 times more return on investment than Mainstay Mackay. However, GM is 20.35 times more volatile than Mainstay Mackay Short. It trades about 0.19 of its potential returns per unit of risk. Mainstay Mackay Short is currently generating about -0.08 per unit of risk. If you would invest 4,484 in General Motors on August 29, 2024 and sell it today you would earn a total of 995.00 from holding General Motors or generate 22.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Mainstay Mackay Short
Performance |
| Timeline |
| General Motors |
| Mainstay Mackay Short |
GM and Mainstay Mackay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mainstay Mackay
The main advantage of trading using opposite GM and Mainstay Mackay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Mainstay Mackay 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 Mackay will offset losses from the drop in Mainstay Mackay's long position.The idea behind General Motors and Mainstay Mackay Short 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 Mackay vs. Sterling Capital Short | Mainstay Mackay vs. Blrc Sgy Mnp | Mainstay Mackay vs. T Rowe Price | Mainstay Mackay vs. Mirova Global Green |
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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