Correlation Between Old Westbury and Mainstay
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Mainstay 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 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Municipal and Mainstay Sp 500, you can compare the effects of market volatilities on Old Westbury and Mainstay 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Mainstay.
Diversification Opportunities for Old Westbury and Mainstay
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Old and Mainstay is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 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 Municipal are associated (or correlated) with Mainstay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Old Westbury i.e., Old Westbury and Mainstay go up and down completely randomly.
Pair Corralation between Old Westbury and Mainstay
Assuming the 90 days horizon Old Westbury is expected to generate 11.05 times less return on investment than Mainstay. But when comparing it to its historical volatility, Old Westbury Municipal is 4.91 times less risky than Mainstay. It trades about 0.05 of its potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,503 in Mainstay Sp 500 on September 3, 2024 and sell it today you would earn a total of 2,202 from holding Mainstay Sp 500 or generate 48.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Municipal vs. Mainstay Sp 500
Performance |
| Timeline |
| Old Westbury Municipal |
| Mainstay Sp 500 |
Old Westbury and Mainstay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Mainstay
The main advantage of trading using opposite Old Westbury and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Mainstay 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 will offset losses from the drop in Mainstay's long position.| Old Westbury vs. Legg Mason Partners | Old Westbury vs. Black Oak Emerging | Old Westbury vs. Transamerica Emerging Markets | Old Westbury vs. T Rowe Price |
| Mainstay vs. Vanguard Total Stock | Mainstay vs. Vanguard 500 Index | Mainstay vs. Vanguard Total Stock | Mainstay vs. Vanguard Total Stock |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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