Correlation Between Vanguard Developed and Mainstay Epoch
Can any of the company-specific risk be diversified away by investing in both Vanguard Developed and Mainstay Epoch 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 Developed and Mainstay Epoch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Developed Markets and Mainstay Epoch International, you can compare the effects of market volatilities on Vanguard Developed and Mainstay Epoch 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 Developed with a short position of Mainstay Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Developed and Mainstay Epoch.
Diversification Opportunities for Vanguard Developed and Mainstay Epoch
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Mainstay is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Developed Markets and Mainstay Epoch International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Inter and Vanguard Developed 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 Developed Markets are associated (or correlated) with Mainstay Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Inter has no effect on the direction of Vanguard Developed i.e., Vanguard Developed and Mainstay Epoch go up and down completely randomly.
Pair Corralation between Vanguard Developed and Mainstay Epoch
Assuming the 90 days horizon Vanguard Developed Markets is expected to generate 1.05 times more return on investment than Mainstay Epoch. However, Vanguard Developed is 1.05 times more volatile than Mainstay Epoch International. It trades about -0.38 of its potential returns per unit of risk. Mainstay Epoch International is currently generating about -0.45 per unit of risk. If you would invest 1,626 in Vanguard Developed Markets on October 9, 2024 and sell it today you would lose (83.00) from holding Vanguard Developed Markets or give up 5.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Developed Markets vs. Mainstay Epoch International
Performance |
| Timeline |
| Vanguard Developed |
| Mainstay Epoch Inter |
Vanguard Developed and Mainstay Epoch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Developed and Mainstay Epoch
The main advantage of trading using opposite Vanguard Developed and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Developed position performs unexpectedly, Mainstay Epoch 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 Epoch will offset losses from the drop in Mainstay Epoch's long position.| Vanguard Developed vs. Vanguard Emerging Markets | Vanguard Developed vs. Vanguard Tax Managed Small Cap | Vanguard Developed vs. Vanguard Small Cap Index | Vanguard Developed vs. Vanguard Value Index |
| Mainstay Epoch vs. Putnam Diversified Income | Mainstay Epoch vs. Huber Capital Diversified | Mainstay Epoch vs. Tax Free Conservative Income | Mainstay Epoch vs. Wealthbuilder Conservative 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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