Correlation Between Blackrock Value and Mainstay Short

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

By analyzing existing cross correlation between Blackrock Value Opps and Mainstay Short Duration, you can compare the effects of market volatilities on Blackrock Value and Mainstay Short 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 Blackrock Value with a short position of Mainstay Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Value and Mainstay Short.

Diversification Opportunities for Blackrock Value and Mainstay Short

-0.15

Correlation Coefficient

Blackrock Value  Mainstay Short

Good diversification

The 3 months correlation between Blackrock and Mainstay is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Value Opps and Mainstay Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Short Duration and Blackrock Value 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 Blackrock Value Opps are associated (or correlated) with Mainstay Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Short Duration has no effect on the direction of Blackrock Value i.e., Blackrock Value and Mainstay Short go up and down completely randomly.

Pair Corralation between Blackrock Value and Mainstay Short

Assuming the 90 days horizon Blackrock Value Opps is expected to under-perform the Mainstay Short. In addition to that, Blackrock Value is 11.19 times more volatile than Mainstay Short Duration. It trades about -0.1 of its total potential returns per unit of risk. Mainstay Short Duration is currently generating about 0.12 per unit of volatility. If you would invest  942.00  in Mainstay Short Duration on December 30, 2024 and sell it today you would earn a total of  8.00  from holding Mainstay Short Duration or generate 0.85% return on investment over 90 days.

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

Blackrock Value Opps  vs.  Mainstay Short Duration

Blackrock Value Opps

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Value Opps has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Mainstay Short Duration

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Short Duration are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Mainstay Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Value and Mainstay Short

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

The idea behind Blackrock Value Opps and Mainstay Short Duration 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.