Correlation Between Mainstay Conservative and Mainstay Moderate

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

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

Diversification Opportunities for Mainstay Conservative and Mainstay Moderate

0.97

Correlation Coefficient

Mainstay Conservative  Mainstay Moderate

Almost no diversification

The 3 months correlation between Mainstay and Mainstay is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Servative Allocation and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate and Mainstay Conservative 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 Servative Allocation are associated (or correlated) with Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of Mainstay Conservative i.e., Mainstay Conservative and Mainstay Moderate go up and down completely randomly.

Pair Corralation between Mainstay Conservative and Mainstay Moderate

Assuming the 90 days horizon Mainstay Conservative is expected to generate 1.43 times less return on investment than Mainstay Moderate. But when comparing it to its historical volatility, Mainstay Servative Allocation is 1.28 times less risky than Mainstay Moderate. It trades about 0.15 of its potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,425  in Mainstay Moderate Allocation on September 5, 2024 and sell it today you would earn a total of  68.00  from holding Mainstay Moderate Allocation or generate 4.77% return on investment over 90 days.

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

Mainstay Servative Allocation  vs.  Mainstay Moderate Allocation

Mainstay Conservative

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Servative Allocation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mainstay Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mainstay Moderate

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Moderate Allocation are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Mainstay Moderate 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 Conservative and Mainstay Moderate

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

The idea behind Mainstay Servative Allocation and Mainstay Moderate Allocation 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.