Correlation Between Mainstay Large and Target Retirement
Can any of the company-specific risk be diversified away by investing in both Mainstay Large and Target Retirement 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 Large and Target Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Large Cap and Target Retirement 2040, you can compare the effects of market volatilities on Mainstay Large and Target Retirement 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 Large with a short position of Target Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Large and Target Retirement.
Diversification Opportunities for Mainstay Large and Target Retirement
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mainstay and Target is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Large Cap and Target Retirement 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Retirement 2040 and Mainstay Large 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 Large Cap are associated (or correlated) with Target Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Retirement 2040 has no effect on the direction of Mainstay Large i.e., Mainstay Large and Target Retirement go up and down completely randomly.
Pair Corralation between Mainstay Large and Target Retirement
Assuming the 90 days horizon Mainstay Large Cap is expected to under-perform the Target Retirement. In addition to that, Mainstay Large is 1.98 times more volatile than Target Retirement 2040. It trades about -0.08 of its total potential returns per unit of risk. Target Retirement 2040 is currently generating about 0.06 per unit of volatility. If you would invest 1,327 in Target Retirement 2040 on November 28, 2024 and sell it today you would earn a total of 7.00 from holding Target Retirement 2040 or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Large Cap vs. Target Retirement 2040
Performance |
| Timeline |
| Mainstay Large Cap |
| Target Retirement 2040 |
Mainstay Large and Target Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Large and Target Retirement
The main advantage of trading using opposite Mainstay Large and Target Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Large position performs unexpectedly, Target Retirement 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 Target Retirement will offset losses from the drop in Target Retirement's long position.| Mainstay Large vs. Intermediate Term Bond Fund | Mainstay Large vs. Multisector Bond Sma | Mainstay Large vs. Versatile Bond Portfolio | Mainstay Large vs. Old Westbury Municipal |
| Target Retirement vs. Inflation Linked Fixed Income | Target Retirement vs. Simt Multi Asset Inflation | Target Retirement vs. Lord Abbett Inflation | Target Retirement vs. Ab Bond Inflation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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