Correlation Between Mainstay Balanced and American Funds
Can any of the company-specific risk be diversified away by investing in both Mainstay Balanced and American Funds 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 Funds 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 Funds American, you can compare the effects of market volatilities on Mainstay Balanced and American Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Balanced and American Funds.
Diversification Opportunities for Mainstay Balanced and American Funds
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Balanced Fund and American Funds American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds American 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds American has no effect on the direction of Mainstay Balanced i.e., Mainstay Balanced and American Funds go up and down completely randomly.
Pair Corralation between Mainstay Balanced and American Funds
Assuming the 90 days horizon Mainstay Balanced Fund is expected to generate 1.02 times more return on investment than American Funds. However, Mainstay Balanced is 1.02 times more volatile than American Funds American. It trades about 0.31 of its potential returns per unit of risk. American Funds American is currently generating about 0.3 per unit of risk. If you would invest 3,190 in Mainstay Balanced Fund on September 4, 2024 and sell it today you would earn a total of 107.00 from holding Mainstay Balanced Fund or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Mainstay Balanced Fund vs. American Funds American
Performance |
| Timeline |
| Mainstay Balanced |
| American Funds American |
Mainstay Balanced and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Balanced and American Funds
The main advantage of trading using opposite Mainstay Balanced and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Balanced position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' long position.| Mainstay Balanced vs. Mainstay Tax Free | Mainstay Balanced vs. Mainstay Large Cap | Mainstay Balanced vs. Mainstay Large Cap | Mainstay Balanced vs. Mainstay Large Cap |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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