Correlation Between Snap and Mainstay Balanced
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and Mainstay Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Mainstay Balanced Fund, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Mainstay Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Mainstay Balanced.
Diversification Opportunities for Snap and Mainstay Balanced
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Mainstay is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Mainstay Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Balanced and Snap 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 Snap Inc 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 Snap i.e., Snap and Mainstay Balanced go up and down completely randomly.
Pair Corralation between Snap and Mainstay Balanced
Given the investment horizon of 90 days Snap Inc is expected to generate 8.64 times more return on investment than Mainstay Balanced. However, Snap is 8.64 times more volatile than Mainstay Balanced Fund. It trades about 0.08 of its potential returns per unit of risk. Mainstay Balanced Fund is currently generating about 0.24 per unit of risk. If you would invest 1,089 in Snap Inc on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Snap Inc or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Snap Inc vs. Mainstay Balanced Fund
Performance |
| Timeline |
| Snap Inc |
| Mainstay Balanced |
Snap and Mainstay Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Mainstay Balanced
The main advantage of trading using opposite Snap and Mainstay Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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.The idea behind Snap Inc and Mainstay Balanced Fund 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 Balanced vs. Hennessy Technology Fund | Mainstay Balanced vs. Towpath Technology | Mainstay Balanced vs. Science Technology Fund | Mainstay Balanced vs. Technology Ultrasector Profund |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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