Correlation Between Mainstay Balanced and Mainstay

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

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

Diversification Opportunities for Mainstay Balanced and Mainstay

0.77

Correlation Coefficient

Mainstay Balanced  Mainstay

Poor diversification

The 3 months correlation between Mainstay and Mainstay is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Balanced Fund 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 Mainstay Balanced 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 Balanced Fund 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 Mainstay Balanced i.e., Mainstay Balanced and Mainstay go up and down completely randomly.

Pair Corralation between Mainstay Balanced and Mainstay

Assuming the 90 days horizon Mainstay Balanced Fund is expected to under-perform the Mainstay. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mainstay Balanced Fund is 1.31 times less risky than Mainstay. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Mainstay Sp 500 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,508  in Mainstay Sp 500 on September 13, 2024 and sell it today you would lose (59.00) from holding Mainstay Sp 500 or give up 0.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Mainstay Balanced Fund  vs.  Mainstay Sp 500

Mainstay Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mainstay Balanced Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Mainstay Balanced 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Sp 500 are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Mainstay 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 Balanced and Mainstay

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

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.