Correlation Between Vanguard High and Mainstay Balanced
Can any of the company-specific risk be diversified away by investing in both Vanguard High and Mainstay Balanced 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 High and Mainstay Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard High Yield Tax Exempt and Mainstay Balanced Fund, you can compare the effects of market volatilities on Vanguard High and Mainstay Balanced 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 High with a short position of Mainstay Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High and Mainstay Balanced.
Diversification Opportunities for Vanguard High and Mainstay Balanced
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vanguard and Mainstay is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Tax Exempt and Mainstay Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Balanced and Vanguard High 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 High Yield Tax Exempt are associated (or correlated) with Mainstay Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Balanced has no effect on the direction of Vanguard High i.e., Vanguard High and Mainstay Balanced go up and down completely randomly.
Pair Corralation between Vanguard High and Mainstay Balanced
Assuming the 90 days horizon Vanguard High is expected to generate 2.15 times less return on investment than Mainstay Balanced. But when comparing it to its historical volatility, Vanguard High Yield Tax Exempt is 1.73 times less risky than Mainstay Balanced. It trades about 0.13 of its potential returns per unit of risk. Mainstay Balanced Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,012 in Mainstay Balanced Fund on September 1, 2024 and sell it today you would earn a total of 296.00 from holding Mainstay Balanced Fund or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vanguard High Yield Tax Exempt vs. Mainstay Balanced Fund
Performance |
| Timeline |
| Vanguard High Yield |
| Mainstay Balanced |
Vanguard High and Mainstay Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High and Mainstay Balanced
The main advantage of trading using opposite Vanguard High and Mainstay Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High position performs unexpectedly, Mainstay Balanced 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 Balanced will offset losses from the drop in Mainstay Balanced's long position.| Vanguard High vs. Vanguard Intermediate Term Tax Exempt | Vanguard High vs. Vanguard Long Term Tax Exempt | Vanguard High vs. Vanguard High Yield Corporate | Vanguard High vs. Vanguard Limited Term Tax Exempt |
| Mainstay Balanced vs. Mainstay Tax Free | Mainstay Balanced vs. Mainstay Large Cap | Mainstay Balanced vs. Mainstay Large Cap | Mainstay Balanced vs. Mainstay Large Cap |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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