Correlation Between Strategic Allocation and Mainstay Moderate
Can any of the company-specific risk be diversified away by investing in both Strategic Allocation and Mainstay Moderate 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 Strategic Allocation and Mainstay Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Allocation Servative and Mainstay Moderate Allocation, you can compare the effects of market volatilities on Strategic Allocation and Mainstay Moderate 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 Strategic Allocation with a short position of Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation and Mainstay Moderate.
Diversification Opportunities for Strategic Allocation and Mainstay Moderate
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Strategic and Mainstay is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Servative and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate and Strategic Allocation 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 Strategic Allocation Servative are associated (or correlated) with Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of Strategic Allocation i.e., Strategic Allocation and Mainstay Moderate go up and down completely randomly.
Pair Corralation between Strategic Allocation and Mainstay Moderate
Assuming the 90 days horizon Strategic Allocation is expected to generate 1.38 times less return on investment than Mainstay Moderate. But when comparing it to its historical volatility, Strategic Allocation Servative is 1.15 times less risky than Mainstay Moderate. It trades about 0.08 of its potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,175 in Mainstay Moderate Allocation on September 12, 2024 and sell it today you would earn a total of 316.00 from holding Mainstay Moderate Allocation or generate 26.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Allocation Servative vs. Mainstay Moderate Allocation
Performance |
| Timeline |
| Strategic Allocation |
| Mainstay Moderate |
Strategic Allocation and Mainstay Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Allocation and Mainstay Moderate
The main advantage of trading using opposite Strategic Allocation and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Allocation position performs unexpectedly, Mainstay Moderate 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 Moderate will offset losses from the drop in Mainstay Moderate's long position.The idea behind Strategic Allocation Servative and Mainstay Moderate Allocation 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 Moderate vs. Strategic Allocation Servative | Mainstay Moderate vs. Strategic Allocation Aggressive | Mainstay Moderate vs. Value Fund Investor | Mainstay Moderate vs. International Growth Fund |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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