Correlation Between Mainstay Conservative and Mainstay Equity
Can any of the company-specific risk be diversified away by investing in both Mainstay Conservative and Mainstay Equity 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 Conservative and Mainstay Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Conservative Etf and Mainstay Equity Etf, you can compare the effects of market volatilities on Mainstay Conservative and Mainstay Equity 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 Conservative with a short position of Mainstay Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Conservative and Mainstay Equity.
Diversification Opportunities for Mainstay Conservative and Mainstay Equity
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mainstay and Mainstay is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Conservative Etf and Mainstay Equity Etf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Equity Etf and Mainstay Conservative 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 Conservative Etf are associated (or correlated) with Mainstay Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Equity Etf has no effect on the direction of Mainstay Conservative i.e., Mainstay Conservative and Mainstay Equity go up and down completely randomly.
Pair Corralation between Mainstay Conservative and Mainstay Equity
Assuming the 90 days horizon Mainstay Conservative is expected to generate 2.6 times less return on investment than Mainstay Equity. But when comparing it to its historical volatility, Mainstay Conservative Etf is 2.01 times less risky than Mainstay Equity. It trades about 0.07 of its potential returns per unit of risk. Mainstay Equity Etf is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,574 in Mainstay Equity Etf on August 24, 2024 and sell it today you would earn a total of 22.00 from holding Mainstay Equity Etf or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Conservative Etf vs. Mainstay Equity Etf
Performance |
| Timeline |
| Mainstay Conservative Etf |
| Mainstay Equity Etf |
Mainstay Conservative and Mainstay Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Conservative and Mainstay Equity
The main advantage of trading using opposite Mainstay Conservative and Mainstay Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Conservative position performs unexpectedly, Mainstay Equity 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 Equity will offset losses from the drop in Mainstay Equity's long position.The idea behind Mainstay Conservative Etf and Mainstay Equity Etf 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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