Correlation Between Mainstay and Mainstay Moderate

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Can any of the company-specific risk be diversified away by investing in both Mainstay and Mainstay Moderate 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 and Mainstay Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Sp 500 and Mainstay Moderate Allocation, you can compare the effects of market volatilities on Mainstay and Mainstay Moderate 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 with a short position of Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay and Mainstay Moderate.

Diversification Opportunities for Mainstay and Mainstay Moderate

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Mainstay and Mainstay is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Sp 500 and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate and Mainstay 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 Sp 500 are associated (or correlated) with Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of Mainstay i.e., Mainstay and Mainstay Moderate go up and down completely randomly.

Pair Corralation between Mainstay and Mainstay Moderate

Assuming the 90 days horizon Mainstay Sp 500 is expected to under-perform the Mainstay Moderate. In addition to that, Mainstay is 3.32 times more volatile than Mainstay Moderate Allocation. It trades about -0.12 of its total potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about 0.13 per unit of volatility. If you would invest  1,477  in Mainstay Moderate Allocation on September 15, 2024 and sell it today you would earn a total of  15.00  from holding Mainstay Moderate Allocation or generate 1.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Mainstay Sp 500  vs.  Mainstay Moderate Allocation

 Performance 
       Timeline  
Mainstay Sp 500 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Sp 500 are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mainstay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Mainstay Moderate 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Moderate Allocation are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mainstay Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mainstay and Mainstay Moderate Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mainstay and Mainstay Moderate

The main advantage of trading using opposite Mainstay and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay position performs unexpectedly, Mainstay Moderate 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 Moderate will offset losses from the drop in Mainstay Moderate's long position.
The idea behind Mainstay Sp 500 and Mainstay Moderate Allocation 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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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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