Correlation Between American Balanced and Mainstay Balanced
Can any of the company-specific risk be diversified away by investing in both American Balanced and Mainstay Balanced 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 American Balanced and Mainstay Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced Fund and Mainstay Balanced Fund, you can compare the effects of market volatilities on American Balanced and Mainstay Balanced 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 American Balanced with a short position of Mainstay Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Mainstay Balanced.
Diversification Opportunities for American Balanced and Mainstay Balanced
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Mainstay is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Mainstay Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Balanced and American Balanced 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 American Balanced Fund are associated (or correlated) with Mainstay Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Balanced has no effect on the direction of American Balanced i.e., American Balanced and Mainstay Balanced go up and down completely randomly.
Pair Corralation between American Balanced and Mainstay Balanced
Assuming the 90 days horizon American Balanced is expected to generate 1.33 times less return on investment than Mainstay Balanced. But when comparing it to its historical volatility, American Balanced Fund is 1.0 times less risky than Mainstay Balanced. It trades about 0.08 of its potential returns per unit of risk. Mainstay Balanced Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,171 in Mainstay Balanced Fund on August 29, 2024 and sell it today you would earn a total of 63.00 from holding Mainstay Balanced Fund or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced Fund vs. Mainstay Balanced Fund
Performance |
| Timeline |
| American Balanced |
| Mainstay Balanced |
American Balanced and Mainstay Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Mainstay Balanced
The main advantage of trading using opposite American Balanced and Mainstay Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Mainstay Balanced 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 Balanced will offset losses from the drop in Mainstay Balanced's long position.| American Balanced vs. Nebraska Municipal Fund | American Balanced vs. Ambrus Core Bond | American Balanced vs. Sterling Capital Short | American Balanced vs. California Bond Fund |
| Mainstay Balanced vs. American Balanced Fund | Mainstay Balanced vs. American Balanced Fund | Mainstay Balanced vs. HUMANA INC | Mainstay Balanced vs. Aquagold International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |