Correlation Between Alphabet and Mainstay Mackay
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and Mainstay Mackay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Mainstay Mackay Short, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of Mainstay Mackay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Mainstay Mackay.
Diversification Opportunities for Alphabet and Mainstay Mackay
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alphabet and Mainstay is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Mainstay Mackay go up and down completely randomly.
Pair Corralation between Alphabet and Mainstay Mackay
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 15.75 times more return on investment than Mainstay Mackay. However, Alphabet is 15.75 times more volatile than Mainstay Mackay Short. It trades about 0.08 of its potential returns per unit of risk. Mainstay Mackay Short is currently generating about 0.12 per unit of risk. If you would invest 9,523 in Alphabet Inc Class C on September 1, 2024 and sell it today you would earn a total of 7,526 from holding Alphabet Inc Class C or generate 79.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Mainstay Mackay Short
Performance |
| Timeline |
| Alphabet Class C |
| Mainstay Mackay Short |
Alphabet and Mainstay Mackay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Mainstay Mackay
The main advantage of trading using opposite Alphabet and Mainstay Mackay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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. Mainstay High Yield | Mainstay Mackay vs. Mainstay Tax Free | Mainstay Mackay vs. Mainstay Income Builder | Mainstay Mackay vs. Mainstay 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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