Correlation Between Vanguard Institutional and Mainstay Mackay
Can any of the company-specific risk be diversified away by investing in both Vanguard Institutional and Mainstay Mackay 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 Institutional and Mainstay Mackay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Institutional Short Term and Mainstay Mackay Strategic, you can compare the effects of market volatilities on Vanguard Institutional and Mainstay Mackay 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 Institutional with a short position of Mainstay Mackay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Institutional and Mainstay Mackay.
Diversification Opportunities for Vanguard Institutional and Mainstay Mackay
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VANGUARD and Mainstay is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Institutional Short T and Mainstay Mackay Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Mackay Strategic and Vanguard Institutional 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 Institutional Short Term are associated (or correlated) with Mainstay Mackay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Mackay Strategic has no effect on the direction of Vanguard Institutional i.e., Vanguard Institutional and Mainstay Mackay go up and down completely randomly.
Pair Corralation between Vanguard Institutional and Mainstay Mackay
Assuming the 90 days horizon Vanguard Institutional Short Term is expected to generate 0.65 times more return on investment than Mainstay Mackay. However, Vanguard Institutional Short Term is 1.54 times less risky than Mainstay Mackay. It trades about 0.18 of its potential returns per unit of risk. Mainstay Mackay Strategic is currently generating about 0.1 per unit of risk. If you would invest 1,221 in Vanguard Institutional Short Term on September 1, 2024 and sell it today you would earn a total of 99.00 from holding Vanguard Institutional Short Term or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Vanguard Institutional Short T vs. Mainstay Mackay Strategic
Performance |
| Timeline |
| Vanguard Institutional |
| Mainstay Mackay Strategic |
Vanguard Institutional and Mainstay Mackay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Institutional and Mainstay Mackay
The main advantage of trading using opposite Vanguard Institutional and Mainstay Mackay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Institutional position performs unexpectedly, Mainstay Mackay 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 Mackay will offset losses from the drop in Mainstay Mackay's long position.The idea behind Vanguard Institutional Short Term and Mainstay Mackay Strategic 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.
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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