Correlation Between Mainstay Balanced and Ab Small
Can any of the company-specific risk be diversified away by investing in both Mainstay Balanced and Ab Small 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 Ab Small 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 Ab Small Cap, you can compare the effects of market volatilities on Mainstay Balanced and Ab Small 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 Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Balanced and Ab Small.
Diversification Opportunities for Mainstay Balanced and Ab Small
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mainstay and SCYVX is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Balanced Fund and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap 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 Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Mainstay Balanced i.e., Mainstay Balanced and Ab Small go up and down completely randomly.
Pair Corralation between Mainstay Balanced and Ab Small
Assuming the 90 days horizon Mainstay Balanced Fund is expected to under-perform the Ab Small. In addition to that, Mainstay Balanced is 1.26 times more volatile than Ab Small Cap. It trades about -0.22 of its total potential returns per unit of risk. Ab Small Cap is currently generating about 0.15 per unit of volatility. If you would invest 1,602 in Ab Small Cap on September 14, 2024 and sell it today you would earn a total of 37.00 from holding Ab Small Cap or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Balanced Fund vs. Ab Small Cap
Performance |
| Timeline |
| Mainstay Balanced |
| Ab Small Cap |
Mainstay Balanced and Ab Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Balanced and Ab Small
The main advantage of trading using opposite Mainstay Balanced and Ab Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Balanced position performs unexpectedly, Ab Small 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 Ab Small will offset losses from the drop in Ab Small's long position.The idea behind Mainstay Balanced Fund and Ab Small Cap 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.
| Ab Small vs. Small Cap Core | Ab Small vs. Aquagold International | Ab Small vs. Morningstar Unconstrained Allocation | Ab Small vs. Thrivent High Yield |
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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