Correlation Between Vanguard California and Mainstay California
Can any of the company-specific risk be diversified away by investing in both Vanguard California and Mainstay California 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 Vanguard California and Mainstay California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard California Long Term and Mainstay California Tax, you can compare the effects of market volatilities on Vanguard California and Mainstay California 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 Vanguard California with a short position of Mainstay California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard California and Mainstay California.
Diversification Opportunities for Vanguard California and Mainstay California
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Mainstay is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard California Long Term and Mainstay California Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay California Tax and Vanguard California 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 Vanguard California Long Term are associated (or correlated) with Mainstay California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay California Tax has no effect on the direction of Vanguard California i.e., Vanguard California and Mainstay California go up and down completely randomly.
Pair Corralation between Vanguard California and Mainstay California
Assuming the 90 days horizon Vanguard California Long Term is expected to generate about the same return on investment as Mainstay California Tax. However, Vanguard California is 1.11 times more volatile than Mainstay California Tax. It trades about 0.07 of its potential returns per unit of risk. Mainstay California Tax is currently producing about 0.08 per unit of risk. If you would invest 920.00 in Mainstay California Tax on September 12, 2024 and sell it today you would earn a total of 68.00 from holding Mainstay California Tax or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard California Long Term vs. Mainstay California Tax
Performance |
| Timeline |
| Vanguard California |
| Mainstay California Tax |
Vanguard California and Mainstay California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard California and Mainstay California
The main advantage of trading using opposite Vanguard California and Mainstay California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard California position performs unexpectedly, Mainstay California 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 California will offset losses from the drop in Mainstay California's long position.The idea behind Vanguard California Long Term and Mainstay California Tax 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 California vs. Vanguard California Long Term | Mainstay California vs. Vanguard California Long Term | Mainstay California vs. SCOR PK | Mainstay California vs. Morningstar Unconstrained Allocation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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