Correlation Between Mainstay Cornerstone and Government Securities

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

By analyzing existing cross correlation between Mainstay Nerstone Growth and Government Securities Fund, you can compare the effects of market volatilities on Mainstay Cornerstone and Government Securities 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 Mainstay Cornerstone with a short position of Government Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Cornerstone and Government Securities.

Diversification Opportunities for Mainstay Cornerstone and Government Securities

0.34

Correlation Coefficient

Mainstay Cornerstone  Government Securities

Weak diversification

The 3 months correlation between Mainstay and Government is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Nerstone Growth and Government Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Securities and Mainstay Cornerstone 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 Mainstay Nerstone Growth are associated (or correlated) with Government Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Securities has no effect on the direction of Mainstay Cornerstone i.e., Mainstay Cornerstone and Government Securities go up and down completely randomly.

Pair Corralation between Mainstay Cornerstone and Government Securities

Assuming the 90 days horizon Mainstay Nerstone Growth is expected to under-perform the Government Securities. In addition to that, Mainstay Cornerstone is 4.42 times more volatile than Government Securities Fund. It trades about 0.0 of its total potential returns per unit of risk. Government Securities Fund is currently generating about 0.01 per unit of volatility. If you would invest  871.00  in Government Securities Fund on October 20, 2024 and sell it today you would earn a total of  1.00  from holding Government Securities Fund or generate 0.11% return on investment over 90 days.

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

Mainstay Nerstone Growth  vs.  Government Securities Fund

Mainstay Nerstone Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mainstay Cornerstone and Government Securities

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

The idea behind Mainstay Nerstone Growth and Government Securities Fund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.