Correlation Between Mainstay Government and Prudential Real
Can any of the company-specific risk be diversified away by investing in both Mainstay Government and Prudential Real 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 Government and Prudential Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Government Fund and Prudential Real Estate, you can compare the effects of market volatilities on Mainstay Government and Prudential Real 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 Government with a short position of Prudential Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Government and Prudential Real.
Diversification Opportunities for Mainstay Government and Prudential Real
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mainstay and Prudential is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Government Fund and Prudential Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Real Estate and Mainstay Government 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 Government Fund are associated (or correlated) with Prudential Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Real Estate has no effect on the direction of Mainstay Government i.e., Mainstay Government and Prudential Real go up and down completely randomly.
Pair Corralation between Mainstay Government and Prudential Real
Assuming the 90 days horizon Mainstay Government is expected to generate 2.41 times less return on investment than Prudential Real. But when comparing it to its historical volatility, Mainstay Government Fund is 1.98 times less risky than Prudential Real. It trades about 0.14 of its potential returns per unit of risk. Prudential Real Estate is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 800.00 in Prudential Real Estate on September 4, 2024 and sell it today you would earn a total of 18.00 from holding Prudential Real Estate or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Government Fund vs. Prudential Real Estate
Performance |
| Timeline |
| Mainstay Government |
| Prudential Real Estate |
Mainstay Government and Prudential Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Government and Prudential Real
The main advantage of trading using opposite Mainstay Government and Prudential Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Government position performs unexpectedly, Prudential Real 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 Prudential Real will offset losses from the drop in Prudential Real's long position.| Mainstay Government vs. Mainstay Tax Free | Mainstay Government vs. Mainstay Large Cap | Mainstay Government vs. Mainstay Large Cap | Mainstay Government vs. Mainstay Large Cap |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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