Correlation Between Mainstay Balanced and MSCI ACWI

Can any of the company-specific risk be diversified away by investing in both Mainstay Balanced and MSCI ACWI 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 MSCI ACWI 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 MSCI ACWI exAUCONSUMER, you can compare the effects of market volatilities on Mainstay Balanced and MSCI ACWI 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 MSCI ACWI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Balanced and MSCI ACWI.

Diversification Opportunities for Mainstay Balanced and MSCI ACWI

-0.04

Correlation Coefficient

Mainstay Balanced  MSCI ACWI

Good diversification

The 3 months correlation between Mainstay and MSCI is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Balanced Fund and MSCI ACWI exAUCONSUMER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI ACWI exAUCONSUMER 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 MSCI ACWI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI ACWI exAUCONSUMER has no effect on the direction of Mainstay Balanced i.e., Mainstay Balanced and MSCI ACWI go up and down completely randomly.

Pair Corralation between Mainstay Balanced and MSCI ACWI

Assuming the 90 days horizon Mainstay Balanced Fund is expected to under-perform the MSCI ACWI. In addition to that, Mainstay Balanced is 2.92 times more volatile than MSCI ACWI exAUCONSUMER. It trades about -0.14 of its total potential returns per unit of risk. MSCI ACWI exAUCONSUMER is currently generating about 0.05 per unit of volatility. If you would invest  2,479  in MSCI ACWI exAUCONSUMER on October 6, 2024 and sell it today you would earn a total of  14.00  from holding MSCI ACWI exAUCONSUMER or generate 0.56% return on investment over 90 days.

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

Mainstay Balanced Fund  vs.  MSCI ACWI exAUCONSUMER

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.

MSCI ACWI exAUCONSUMER

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI ACWI exAUCONSUMER are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, MSCI ACWI is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Mainstay Balanced and MSCI ACWI

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

The idea behind Mainstay Balanced Fund and MSCI ACWI exAUCONSUMER 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.