Correlation Between Ab Impact and Mainstay International

Can any of the company-specific risk be diversified away by investing in both Ab Impact and Mainstay International 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 Ab Impact and Mainstay International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ab Impact Municipal and Mainstay International Opportunities, you can compare the effects of market volatilities on Ab Impact and Mainstay International 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 Ab Impact with a short position of Mainstay International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Impact and Mainstay International.

Diversification Opportunities for Ab Impact and Mainstay International

0.56

Correlation Coefficient

Ab Impact  Mainstay International

Very weak diversification

The 3 months correlation between ABIMX and Mainstay is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Mainstay International Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay International and Ab Impact 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 Ab Impact Municipal are associated (or correlated) with Mainstay International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay International has no effect on the direction of Ab Impact i.e., Ab Impact and Mainstay International go up and down completely randomly.

Pair Corralation between Ab Impact and Mainstay International

Assuming the 90 days horizon Ab Impact is expected to generate 10.38 times less return on investment than Mainstay International. But when comparing it to its historical volatility, Ab Impact Municipal is 2.9 times less risky than Mainstay International. It trades about 0.05 of its potential returns per unit of risk. Mainstay International Opportunities is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  755.00  in Mainstay International Opportunities on December 21, 2024 and sell it today you would earn a total of  68.00  from holding Mainstay International Opportunities or generate 9.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ab Impact Municipal  vs.  Mainstay International Opportu

Ab Impact Municipal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Impact Municipal are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Ab Impact is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mainstay International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay International Opportunities are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Mainstay International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ab Impact and Mainstay International

The main advantage of trading using opposite Ab Impact and Mainstay International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact position performs unexpectedly, Mainstay International 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 International will offset losses from the drop in Mainstay International's long position.

The idea behind Ab Impact Municipal and Mainstay International Opportunities 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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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.