Correlation Between Mainstay Defined and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Mainstay Defined and Vanguard Total 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 Mainstay Defined and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Defined Term and Vanguard Total Stock, you can compare the effects of market volatilities on Mainstay Defined and Vanguard Total 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 Mainstay Defined with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Defined and Vanguard Total.
Diversification Opportunities for Mainstay Defined and Vanguard Total
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mainstay and Vanguard is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Defined Term and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Mainstay Defined 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 Mainstay Defined Term are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Mainstay Defined i.e., Mainstay Defined and Vanguard Total go up and down completely randomly.
Pair Corralation between Mainstay Defined and Vanguard Total
Assuming the 90 days horizon Mainstay Defined Term is expected to under-perform the Vanguard Total. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mainstay Defined Term is 2.74 times less risky than Vanguard Total. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Vanguard Total Stock is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13,173 in Vanguard Total Stock on November 2, 2024 and sell it today you would earn a total of 1,440 from holding Vanguard Total Stock or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Defined Term vs. Vanguard Total Stock
Performance |
| Timeline |
| Mainstay Defined Term |
| Vanguard Total Stock |
Mainstay Defined and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Defined and Vanguard Total
The main advantage of trading using opposite Mainstay Defined and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Defined position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| Mainstay Defined vs. Vanguard Total Stock | Mainstay Defined vs. Vanguard 500 Index | Mainstay Defined vs. Vanguard Total Stock | Mainstay Defined vs. Vanguard Total Stock |
| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard 500 Index | Vanguard Total vs. Vanguard Reit Index |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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