Correlation Between Mainstay Cornerstone and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both Mainstay Cornerstone and Principal Lifetime 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 Mainstay Cornerstone and Principal Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Nerstone Growth and Principal Lifetime Hybrid, you can compare the effects of market volatilities on Mainstay Cornerstone and Principal Lifetime 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 Mainstay Cornerstone with a short position of Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Cornerstone and Principal Lifetime.
Diversification Opportunities for Mainstay Cornerstone and Principal Lifetime
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and PRINCIPAL is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Nerstone Growth and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid and Mainstay Cornerstone 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 Mainstay Nerstone Growth are associated (or correlated) with Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of Mainstay Cornerstone i.e., Mainstay Cornerstone and Principal Lifetime go up and down completely randomly.
Pair Corralation between Mainstay Cornerstone and Principal Lifetime
Assuming the 90 days horizon Mainstay Nerstone Growth is expected to generate 1.36 times more return on investment than Principal Lifetime. However, Mainstay Cornerstone is 1.36 times more volatile than Principal Lifetime Hybrid. It trades about 0.1 of its potential returns per unit of risk. Principal Lifetime Hybrid is currently generating about 0.07 per unit of risk. If you would invest 2,982 in Mainstay Nerstone Growth on September 4, 2024 and sell it today you would earn a total of 1,945 from holding Mainstay Nerstone Growth or generate 65.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Mainstay Nerstone Growth vs. Principal Lifetime Hybrid
Performance |
| Timeline |
| Mainstay Nerstone Growth |
| Principal Lifetime Hybrid |
Mainstay Cornerstone and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Cornerstone and Principal Lifetime
The main advantage of trading using opposite Mainstay Cornerstone and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Cornerstone position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime's long position.The idea behind Mainstay Nerstone Growth and Principal Lifetime Hybrid 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.
| Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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