Correlation Between Mainstay Balanced and The Gold

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

Diversification Opportunities for Mainstay Balanced and The Gold

0.55

Correlation Coefficient

Mainstay Balanced  The Gold

Very weak diversification

The 3 months correlation between Mainstay and The is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Balanced Fund and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion 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 The Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion has no effect on the direction of Mainstay Balanced i.e., Mainstay Balanced and The Gold go up and down completely randomly.

Pair Corralation between Mainstay Balanced and The Gold

Assuming the 90 days horizon Mainstay Balanced Fund is expected to generate 0.22 times more return on investment than The Gold. However, Mainstay Balanced Fund is 4.46 times less risky than The Gold. It trades about -0.24 of its potential returns per unit of risk. The Gold Bullion is currently generating about -0.16 per unit of risk. If you would invest  3,264  in Mainstay Balanced Fund on October 10, 2024 and sell it today you would lose (230.00) from holding Mainstay Balanced Fund or give up 7.05% of portfolio value over 90 days.

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

Mainstay Balanced Fund  vs.  The Gold Bullion

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 basic indicators, Mainstay Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gold Bullion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gold Bullion has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Mainstay Balanced and The Gold

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

The idea behind Mainstay Balanced Fund and The Gold Bullion 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.