Correlation Between Mainstay Moderate and Maryland Tax-free
Can any of the company-specific risk be diversified away by investing in both Mainstay Moderate and Maryland Tax-free 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 Moderate and Maryland Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Moderate Allocation and Maryland Tax Free Bond, you can compare the effects of market volatilities on Mainstay Moderate and Maryland Tax-free 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 Moderate with a short position of Maryland Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Moderate and Maryland Tax-free.
Diversification Opportunities for Mainstay Moderate and Maryland Tax-free
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mainstay and Maryland is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Moderate Allocation and Maryland Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maryland Tax Free and Mainstay Moderate 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 Moderate Allocation are associated (or correlated) with Maryland Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maryland Tax Free has no effect on the direction of Mainstay Moderate i.e., Mainstay Moderate and Maryland Tax-free go up and down completely randomly.
Pair Corralation between Mainstay Moderate and Maryland Tax-free
Assuming the 90 days horizon Mainstay Moderate Allocation is expected to generate 2.38 times more return on investment than Maryland Tax-free. However, Mainstay Moderate is 2.38 times more volatile than Maryland Tax Free Bond. It trades about 0.04 of its potential returns per unit of risk. Maryland Tax Free Bond is currently generating about 0.1 per unit of risk. If you would invest 1,289 in Mainstay Moderate Allocation on November 4, 2024 and sell it today you would earn a total of 75.00 from holding Mainstay Moderate Allocation or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Moderate Allocation vs. Maryland Tax Free Bond
Performance |
| Timeline |
| Mainstay Moderate |
| Maryland Tax Free |
Mainstay Moderate and Maryland Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Moderate and Maryland Tax-free
The main advantage of trading using opposite Mainstay Moderate and Maryland Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Moderate position performs unexpectedly, Maryland Tax-free 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 Maryland Tax-free will offset losses from the drop in Maryland Tax-free's long position.| Mainstay Moderate vs. Siit High Yield | Mainstay Moderate vs. Gmo High Yield | Mainstay Moderate vs. Lord Abbett Short | Mainstay Moderate vs. Tiaa Cref High Yield |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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