Correlation Between Mainstay Tax and Mainstay Short

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

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

Diversification Opportunities for Mainstay Tax and Mainstay Short

-0.55

Correlation Coefficient

Mainstay Tax  Mainstay Short

Excellent diversification

The 3 months correlation between Mainstay and Mainstay is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Tax Free 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 Mainstay Tax 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 Tax Free 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 Mainstay Tax i.e., Mainstay Tax and Mainstay Short go up and down completely randomly.

Pair Corralation between Mainstay Tax and Mainstay Short

Assuming the 90 days horizon Mainstay Tax is expected to generate 1.12 times less return on investment than Mainstay Short. In addition to that, Mainstay Tax is 2.08 times more volatile than Mainstay Short Duration. It trades about 0.05 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	Very Weak
Accuracy	58.06%
Values	Daily Returns

Mainstay Tax Free  vs.  Mainstay Short Duration

Mainstay Tax Free

Risk-Adjusted Performance

Insignificant

Over the last 90 days Mainstay Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Mainstay Tax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 Mainstay Tax and Mainstay Short

The main advantage of trading using opposite Mainstay Tax and Mainstay Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Tax 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 Mainstay Tax Free 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.