Correlation Between Mainstay Moderate and Mainstay High
Can any of the company-specific risk be diversified away by investing in both Mainstay Moderate and Mainstay High 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 Mainstay High 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 Mainstay High Yield, you can compare the effects of market volatilities on Mainstay Moderate and Mainstay High 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 Mainstay High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Moderate and Mainstay High.
Diversification Opportunities for Mainstay Moderate and Mainstay High
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mainstay and Mainstay is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Moderate Allocation and Mainstay High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay High Yield 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 Mainstay High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay High Yield has no effect on the direction of Mainstay Moderate i.e., Mainstay Moderate and Mainstay High go up and down completely randomly.
Pair Corralation between Mainstay Moderate and Mainstay High
Assuming the 90 days horizon Mainstay Moderate Allocation is expected to generate 3.34 times more return on investment than Mainstay High. However, Mainstay Moderate is 3.34 times more volatile than Mainstay High Yield. It trades about 0.13 of its potential returns per unit of risk. Mainstay High Yield is currently generating about 0.22 per unit of risk. If you would invest 1,377 in Mainstay Moderate Allocation on September 1, 2024 and sell it today you would earn a total of 116.00 from holding Mainstay Moderate Allocation or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Moderate Allocation vs. Mainstay High Yield
Performance |
| Timeline |
| Mainstay Moderate |
| Mainstay High Yield |
Mainstay Moderate and Mainstay High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Moderate and Mainstay High
The main advantage of trading using opposite Mainstay Moderate and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Moderate position performs unexpectedly, Mainstay High 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 Mainstay High will offset losses from the drop in Mainstay High's long position.| Mainstay Moderate vs. Mainstay Tax Free | Mainstay Moderate vs. Mainstay Large Cap | Mainstay Moderate vs. Mainstay Large Cap | Mainstay Moderate vs. Mainstay Large Cap |
| Mainstay High vs. Mainstay Tax Free | Mainstay High vs. Mainstay Large Cap | Mainstay High vs. Mainstay Large Cap | Mainstay High vs. Mainstay Large Cap |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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