Correlation Between Mainstay Income and Mainstay 130/30

Can any of the company-specific risk be diversified away by investing in both Mainstay Income and Mainstay 130/30 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 Income and Mainstay 130/30 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mainstay Income Builder and Mainstay 13030 International, you can compare the effects of market volatilities on Mainstay Income and Mainstay 130/30 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 Income with a short position of Mainstay 130/30. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Income and Mainstay 130/30.

Diversification Opportunities for Mainstay Income and Mainstay 130/30

-0.13

Correlation Coefficient

Mainstay Income  Mainstay 130/30

Good diversification

The 3 months correlation between Mainstay and Mainstay is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Income Builder and Mainstay 13030 International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay 13030 Inter and Mainstay Income 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 Income Builder are associated (or correlated) with Mainstay 130/30. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay 13030 Inter has no effect on the direction of Mainstay Income i.e., Mainstay Income and Mainstay 130/30 go up and down completely randomly.

Pair Corralation between Mainstay Income and Mainstay 130/30

Assuming the 90 days horizon Mainstay Income is expected to generate 1.15 times less return on investment than Mainstay 130/30. But when comparing it to its historical volatility, Mainstay Income Builder is 1.56 times less risky than Mainstay 130/30. It trades about 0.23 of its potential returns per unit of risk. Mainstay 13030 International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  769.00  in Mainstay 13030 International on December 28, 2024 and sell it today you would earn a total of  64.00  from holding Mainstay 13030 International or generate 8.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.0%
Values	Daily Returns

Mainstay Income Builder  vs.  Mainstay 13030 International

Mainstay Income Builder

Risk-Adjusted Performance

Solid

Over the last 90 days Mainstay Income Builder has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Mainstay Income may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mainstay 13030 Inter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay 13030 International are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mainstay 130/30 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mainstay Income and Mainstay 130/30

The main advantage of trading using opposite Mainstay Income and Mainstay 130/30 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Income position performs unexpectedly, Mainstay 130/30 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 130/30 will offset losses from the drop in Mainstay 130/30's long position.

The idea behind Mainstay Income Builder and Mainstay 13030 International 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.