Correlation Between Mainstay Tax and Mainstay Total

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

Diversification Opportunities for Mainstay Tax and Mainstay Total

0.79

Correlation Coefficient

Mainstay Tax  Mainstay Total

Poor diversification

The 3 months correlation between Mainstay and Mainstay is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Tax Free and Mainstay Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Total Return 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Total Return has no effect on the direction of Mainstay Tax i.e., Mainstay Tax and Mainstay Total go up and down completely randomly.

Pair Corralation between Mainstay Tax and Mainstay Total

Assuming the 90 days horizon Mainstay Tax is expected to generate 4.22 times less return on investment than Mainstay Total. But when comparing it to its historical volatility, Mainstay Tax Free is 1.4 times less risky than Mainstay Total. It trades about 0.02 of its potential returns per unit of risk. Mainstay Total Return is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  881.00  in Mainstay Total Return on September 27, 2024 and sell it today you would earn a total of  21.00  from holding Mainstay Total Return or generate 2.38% return on investment over 90 days.

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

Mainstay Tax Free  vs.  Mainstay Total Return

Mainstay Tax Free

Risk-Adjusted Performance

0 of 100

Very Weak

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 Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mainstay Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Mainstay Total 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 Total

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

The idea behind Mainstay Tax Free and Mainstay Total Return 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.