Correlation Between Cb Large and Mainstay
Can any of the company-specific risk be diversified away by investing in both Cb Large and Mainstay 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 Cb Large and Mainstay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cb Large Cap and Mainstay Sp 500, you can compare the effects of market volatilities on Cb Large and Mainstay 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 Cb Large with a short position of Mainstay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cb Large and Mainstay.
Diversification Opportunities for Cb Large and Mainstay
Very poor diversification
The 3 months correlation between CBLSX and Mainstay is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cb Large Cap and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 and Cb Large 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 Cb Large Cap are associated (or correlated) with Mainstay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Cb Large i.e., Cb Large and Mainstay go up and down completely randomly.
Pair Corralation between Cb Large and Mainstay
Assuming the 90 days horizon Cb Large is expected to generate 5.98 times less return on investment than Mainstay. But when comparing it to its historical volatility, Cb Large Cap is 1.2 times less risky than Mainstay. It trades about 0.04 of its potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,978 in Mainstay Sp 500 on September 15, 2024 and sell it today you would earn a total of 454.00 from holding Mainstay Sp 500 or generate 7.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Cb Large Cap vs. Mainstay Sp 500
Performance |
Timeline |
Cb Large Cap |
Mainstay Sp 500 |
Cb Large and Mainstay Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cb Large and Mainstay
The main advantage of trading using opposite Cb Large and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cb Large position performs unexpectedly, Mainstay 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 will offset losses from the drop in Mainstay's long position.Cb Large vs. Cb Large Cap | ||
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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