Correlation Between Voya Real and Mainstay

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

By analyzing existing cross correlation between Voya Real Estate and Mainstay Sp 500, you can compare the effects of market volatilities on Voya Real 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 Voya Real with a short position of Mainstay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Real and Mainstay.

Diversification Opportunities for Voya Real and Mainstay

0.71

Correlation Coefficient

Voya Real  Mainstay

Poor diversification

The 3 months correlation between Voya and Mainstay is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Voya Real Estate 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 Voya Real 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 Voya Real Estate 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 Voya Real i.e., Voya Real and Mainstay go up and down completely randomly.

Pair Corralation between Voya Real and Mainstay

Assuming the 90 days horizon Voya Real is expected to generate 1.5 times less return on investment than Mainstay. In addition to that, Voya Real is 1.33 times more volatile than Mainstay Sp 500. It trades about 0.04 of its total potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.08 per unit of volatility. If you would invest  4,653  in Mainstay Sp 500 on December 4, 2024 and sell it today you would earn a total of  1,555  from holding Mainstay Sp 500 or generate 33.42% return on investment over 90 days.

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

Voya Real Estate  vs.  Mainstay Sp 500

Voya Real Estate

Risk-Adjusted Performance

Very Weak

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

Mainstay Sp 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mainstay Sp 500 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Voya Real and Mainstay

The main advantage of trading using opposite Voya Real and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Real 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.

The idea behind Voya Real Estate and Mainstay Sp 500 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.