Correlation Between Ford and Mainstay Mackay

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

By analyzing existing cross correlation between Ford Motor and Mainstay Mackay Unconstrained, you can compare the effects of market volatilities on Ford and Mainstay Mackay 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 Ford with a short position of Mainstay Mackay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mainstay Mackay.

Diversification Opportunities for Ford and Mainstay Mackay

0.07

Correlation Coefficient

Ford  Mainstay Mackay

Significant diversification

The 3 months correlation between Ford and Mainstay is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mainstay Mackay Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Mackay Unco and Ford 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 Ford Motor are associated (or correlated) with Mainstay Mackay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Mackay Unco has no effect on the direction of Ford i.e., Ford and Mainstay Mackay go up and down completely randomly.

Pair Corralation between Ford and Mainstay Mackay

Taking into account the 90-day investment horizon Ford Motor is expected to generate 11.08 times more return on investment than Mainstay Mackay. However, Ford is 11.08 times more volatile than Mainstay Mackay Unconstrained. It trades about 0.05 of its potential returns per unit of risk. Mainstay Mackay Unconstrained is currently generating about 0.22 per unit of risk. If you would invest  975.00  in Ford Motor on December 25, 2024 and sell it today you would earn a total of  50.00  from holding Ford Motor or generate 5.13% return on investment over 90 days.

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

Ford Motor  vs.  Mainstay Mackay Unconstrained

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mainstay Mackay Unco

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Mackay Unconstrained are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mainstay Mackay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Mainstay Mackay

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

The idea behind Ford Motor and Mainstay Mackay Unconstrained 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.