Correlation Between Capital Income and Mainstay Income
Can any of the company-specific risk be diversified away by investing in both Capital Income and Mainstay Income 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 Capital Income and Mainstay Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and Mainstay Income Builder, you can compare the effects of market volatilities on Capital Income and Mainstay Income 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 Capital Income with a short position of Mainstay Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Mainstay Income.
Diversification Opportunities for Capital Income and Mainstay Income
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Mainstay is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Mainstay Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Income Builder and Capital Income 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 Capital Income Builder are associated (or correlated) with Mainstay Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Income Builder has no effect on the direction of Capital Income i.e., Capital Income and Mainstay Income go up and down completely randomly.
Pair Corralation between Capital Income and Mainstay Income
Assuming the 90 days horizon Capital Income is expected to generate 1.47 times less return on investment than Mainstay Income. But when comparing it to its historical volatility, Capital Income Builder is 1.3 times less risky than Mainstay Income. It trades about 0.03 of its potential returns per unit of risk. Mainstay Income Builder is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,083 in Mainstay Income Builder on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Mainstay Income Builder or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. Mainstay Income Builder
Performance |
| Timeline |
| Capital Income Builder |
| Mainstay Income Builder |
Capital Income and Mainstay Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Mainstay Income
The main advantage of trading using opposite Capital Income and Mainstay Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Mainstay Income 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 Income will offset losses from the drop in Mainstay Income's long position.| Capital Income vs. Putnam Money Market | Capital Income vs. Blackrock Exchange Portfolio | Capital Income vs. John Hancock Money | Capital Income vs. Schwab Treasury Money |
| Mainstay Income vs. Mainstay Sp 500 | Mainstay Income vs. Mainstay Vertible Fund | Mainstay Income vs. Mainstay Large Cap | Mainstay Income vs. Mainstay Map Equity |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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