Correlation Between The National and Mainstay New

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

By analyzing existing cross correlation between The National Tax Free and Mainstay New York, you can compare the effects of market volatilities on The National and Mainstay New 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 The National with a short position of Mainstay New. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and Mainstay New.

Diversification Opportunities for The National and Mainstay New

0.97

Correlation Coefficient

The National  Mainstay New

Almost no diversification

The 3 months correlation between The and Mainstay is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Mainstay New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay New York and The National 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 The National Tax Free are associated (or correlated) with Mainstay New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay New York has no effect on the direction of The National i.e., The National and Mainstay New go up and down completely randomly.

Pair Corralation between The National and Mainstay New

Assuming the 90 days horizon The National Tax Free is expected to generate 0.78 times more return on investment than Mainstay New. However, The National Tax Free is 1.29 times less risky than Mainstay New. It trades about -0.33 of its potential returns per unit of risk. Mainstay New York is currently generating about -0.38 per unit of risk. If you would invest  1,885  in The National Tax Free on October 8, 2024 and sell it today you would lose (26.00) from holding The National Tax Free or give up 1.38% of portfolio value over 90 days.

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

The National Tax Free  vs.  Mainstay New York

National Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The National Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, The National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mainstay New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mainstay New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Mainstay New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The National and Mainstay New

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

The idea behind The National Tax Free and Mainstay New York 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.