Correlation Between California Bond and Mainstay Moderate
Can any of the company-specific risk be diversified away by investing in both California Bond 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 California Bond and Mainstay Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Mainstay Moderate Allocation, you can compare the effects of market volatilities on California Bond 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 California Bond with a short position of Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Mainstay Moderate.
Diversification Opportunities for California Bond and Mainstay Moderate
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between California and Mainstay is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate and California Bond 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 California Bond Fund 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 California Bond i.e., California Bond and Mainstay Moderate go up and down completely randomly.
Pair Corralation between California Bond and Mainstay Moderate
Assuming the 90 days horizon California Bond is expected to generate 2.65 times less return on investment than Mainstay Moderate. But when comparing it to its historical volatility, California Bond Fund is 2.25 times less risky than Mainstay Moderate. It trades about 0.1 of its potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,240 in Mainstay Moderate Allocation on August 24, 2024 and sell it today you would earn a total of 190.00 from holding Mainstay Moderate Allocation or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Mainstay Moderate Allocation
Performance |
| Timeline |
| California Bond |
| Mainstay Moderate |
California Bond and Mainstay Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Mainstay Moderate
The main advantage of trading using opposite California Bond and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond 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.| California Bond vs. Vanguard California Long Term | California Bond vs. HUMANA INC | California Bond vs. Aquagold International | California Bond vs. Barloworld Ltd ADR |
| Mainstay Moderate vs. Pace Municipal Fixed | Mainstay Moderate vs. T Rowe Price | Mainstay Moderate vs. Nuveen All American Municipal | Mainstay Moderate vs. California Bond 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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