Correlation Between Mainstay Balanced and American Balanced
Can any of the company-specific risk be diversified away by investing in both Mainstay Balanced and American 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 Mainstay Balanced and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Balanced Fund and American Balanced Fund, you can compare the effects of market volatilities on Mainstay Balanced and American 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 Mainstay Balanced with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Balanced and American Balanced.
Diversification Opportunities for Mainstay Balanced and American Balanced
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Balanced Fund and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced and Mainstay Balanced 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 Balanced Fund are associated (or correlated) with American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Mainstay Balanced i.e., Mainstay Balanced and American Balanced go up and down completely randomly.
Pair Corralation between Mainstay Balanced and American Balanced
Assuming the 90 days horizon Mainstay Balanced Fund is expected to generate 1.0 times more return on investment than American Balanced. However, Mainstay Balanced Fund is 1.0 times less risky than American Balanced. It trades about 0.19 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.14 per unit of risk. If you would invest 3,161 in Mainstay Balanced Fund on August 29, 2024 and sell it today you would earn a total of 73.00 from holding Mainstay Balanced Fund or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Balanced Fund vs. American Balanced Fund
Performance |
| Timeline |
| Mainstay Balanced |
| American Balanced |
Mainstay Balanced and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Balanced and American Balanced
The main advantage of trading using opposite Mainstay Balanced and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Balanced position performs unexpectedly, American 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 American Balanced will offset losses from the drop in American Balanced's long position.| Mainstay Balanced vs. American Balanced Fund | Mainstay Balanced vs. American Balanced Fund | Mainstay Balanced vs. HUMANA INC | Mainstay Balanced vs. Aquagold International |
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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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