Correlation Between NYLI MacKay and Hartford Municipal

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

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

Diversification Opportunities for NYLI MacKay and Hartford Municipal

0.85

Correlation Coefficient

NYLI MacKay  Hartford Municipal

Very poor diversification

The 3 months correlation between NYLI and Hartford is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding NYLI MacKay Core and Hartford Municipal Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal and NYLI MacKay 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 NYLI MacKay Core are associated (or correlated) with Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal has no effect on the direction of NYLI MacKay i.e., NYLI MacKay and Hartford Municipal go up and down completely randomly.

Pair Corralation between NYLI MacKay and Hartford Municipal

Given the investment horizon of 90 days NYLI MacKay Core is expected to generate 1.39 times more return on investment than Hartford Municipal. However, NYLI MacKay is 1.39 times more volatile than Hartford Municipal Opportunities. It trades about 0.14 of its potential returns per unit of risk. Hartford Municipal Opportunities is currently generating about 0.04 per unit of risk. If you would invest  2,078  in NYLI MacKay Core on October 26, 2024 and sell it today you would earn a total of  16.00  from holding NYLI MacKay Core or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

NYLI MacKay Core  vs.  Hartford Municipal Opportuniti

NYLI MacKay Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NYLI MacKay Core has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, NYLI MacKay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Municipal Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hartford Municipal is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with NYLI MacKay and Hartford Municipal

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

The idea behind NYLI MacKay Core and Hartford Municipal 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.