Correlation Between Alphabet and Mainstay
Can any of the company-specific risk be diversified away by investing in both Alphabet and Mainstay 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 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 Sp 500, you can compare the effects of market volatilities on Alphabet and Mainstay 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Mainstay.
Diversification Opportunities for Alphabet and Mainstay
Very poor diversification
The 3 months correlation between Alphabet and Mainstay is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Alphabet i.e., Alphabet and Mainstay go up and down completely randomly.
Pair Corralation between Alphabet and Mainstay
Given the investment horizon of 90 days Alphabet is expected to generate 1.81 times less return on investment than Mainstay. In addition to that, Alphabet is 2.17 times more volatile than Mainstay Sp 500. It trades about 0.04 of its total potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.15 per unit of volatility. If you would invest 6,424 in Mainstay Sp 500 on August 29, 2024 and sell it today you would earn a total of 297.00 from holding Mainstay Sp 500 or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Mainstay Sp 500
Performance |
| Timeline |
| Alphabet Class C |
| Mainstay Sp 500 |
Alphabet and Mainstay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Mainstay
The main advantage of trading using opposite Alphabet and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Mainstay 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 will offset losses from the drop in Mainstay's long position.The idea behind Alphabet Inc Class C and Mainstay Sp 500 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 vs. Franklin Adjustable Government | Mainstay vs. Inverse Government Long | Mainstay vs. Government Securities Fund | Mainstay vs. Blackrock Government Bond |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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