Correlation Between Alphabet and Mainstay Unconstrained

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

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

Diversification Opportunities for Alphabet and Mainstay Unconstrained

-0.56

Correlation Coefficient

Alphabet  Mainstay Unconstrained

Excellent diversification

The 3 months correlation between Alphabet and Mainstay is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Mainstay Unconstrained Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Unconstrained and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Mainstay Unconstrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Unconstrained has no effect on the direction of Alphabet i.e., Alphabet and Mainstay Unconstrained go up and down completely randomly.

Pair Corralation between Alphabet and Mainstay Unconstrained

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 6.57 times more return on investment than Mainstay Unconstrained. However, Alphabet is 6.57 times more volatile than Mainstay Unconstrained Bond. It trades about 0.09 of its potential returns per unit of risk. Mainstay Unconstrained Bond is currently generating about 0.1 per unit of risk. If you would invest  8,938  in Alphabet Inc Class C on September 23, 2024 and sell it today you would earn a total of  10,358  from holding Alphabet Inc Class C or generate 115.89% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Mainstay Unconstrained Bond

Alphabet Class C

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Mainstay Unconstrained

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alphabet and Mainstay Unconstrained

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

The idea behind Alphabet Inc Class C and Mainstay Unconstrained Bond 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.