Correlation Between Vanguard 500 and Mainstay
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Mainstay 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 500 and Mainstay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Mainstay Sp 500, you can compare the effects of market volatilities on Vanguard 500 and Mainstay 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 500 with a short position of Mainstay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Mainstay.
Diversification Opportunities for Vanguard 500 and Mainstay
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Mainstay is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 and Vanguard 500 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 500 Index are associated (or correlated) with Mainstay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Mainstay go up and down completely randomly.
Pair Corralation between Vanguard 500 and Mainstay
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 0.97 times more return on investment than Mainstay. However, Vanguard 500 Index is 1.04 times less risky than Mainstay. It trades about 0.15 of its potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.13 per unit of risk. If you would invest 41,581 in Vanguard 500 Index on August 24, 2024 and sell it today you would earn a total of 13,111 from holding Vanguard 500 Index or generate 31.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Vanguard 500 Index vs. Mainstay Sp 500
Performance |
| Timeline |
| Vanguard 500 Index |
| Mainstay Sp 500 |
Vanguard 500 and Mainstay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Mainstay
The main advantage of trading using opposite Vanguard 500 and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Mainstay 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 will offset losses from the drop in Mainstay's long position.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Total Bond | Vanguard 500 vs. Vanguard Windsor Ii | Vanguard 500 vs. Vanguard Small Cap Index |
| Mainstay vs. Champlain Small | Mainstay vs. Tax Managed Mid Small | Mainstay vs. Touchstone Small Cap | Mainstay vs. Small Pany Growth |
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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