Correlation Between Old Westbury and Mainstay Short
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Mainstay Short 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 Old Westbury and Mainstay Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Large and Mainstay Short Duration, you can compare the effects of market volatilities on Old Westbury and Mainstay Short 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 Old Westbury with a short position of Mainstay Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Mainstay Short.
Diversification Opportunities for Old Westbury and Mainstay Short
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Mainstay is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Mainstay Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Short Duration and Old Westbury 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 Old Westbury Large are associated (or correlated) with Mainstay Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Short Duration has no effect on the direction of Old Westbury i.e., Old Westbury and Mainstay Short go up and down completely randomly.
Pair Corralation between Old Westbury and Mainstay Short
Assuming the 90 days horizon Old Westbury Large is expected to generate 5.05 times more return on investment than Mainstay Short. However, Old Westbury is 5.05 times more volatile than Mainstay Short Duration. It trades about 0.31 of its potential returns per unit of risk. Mainstay Short Duration is currently generating about 0.08 per unit of risk. If you would invest 2,055 in Old Westbury Large on September 1, 2024 and sell it today you would earn a total of 83.00 from holding Old Westbury Large or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Old Westbury Large vs. Mainstay Short Duration
Performance |
| Timeline |
| Old Westbury Large |
| Mainstay Short Duration |
Old Westbury and Mainstay Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Mainstay Short
The main advantage of trading using opposite Old Westbury and Mainstay Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Mainstay Short 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 Short will offset losses from the drop in Mainstay Short's long position.The idea behind Old Westbury Large and Mainstay Short Duration 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.| Mainstay Short vs. T Rowe Price | Mainstay Short vs. Old Westbury Large | Mainstay Short vs. Principal Lifetime Hybrid | Mainstay Short vs. Qs 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |