Correlation Between Mainstay Moderate and Nuveen California

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Can any of the company-specific risk be diversified away by investing in both Mainstay Moderate and Nuveen California 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 Moderate and Nuveen California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Moderate Allocation and Nuveen California Municipal, you can compare the effects of market volatilities on Mainstay Moderate and Nuveen California 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 Moderate with a short position of Nuveen California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Moderate and Nuveen California.

Diversification Opportunities for Mainstay Moderate and Nuveen California

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between MAINSTAY and Nuveen is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Moderate Allocation and Nuveen California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California and Mainstay Moderate 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 Moderate Allocation are associated (or correlated) with Nuveen California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California has no effect on the direction of Mainstay Moderate i.e., Mainstay Moderate and Nuveen California go up and down completely randomly.

Pair Corralation between Mainstay Moderate and Nuveen California

Assuming the 90 days horizon Mainstay Moderate Allocation is expected to under-perform the Nuveen California. In addition to that, Mainstay Moderate is 4.15 times more volatile than Nuveen California Municipal. It trades about -0.06 of its total potential returns per unit of risk. Nuveen California Municipal is currently generating about 0.02 per unit of volatility. If you would invest  1,001  in Nuveen California Municipal on October 24, 2024 and sell it today you would earn a total of  1.00  from holding Nuveen California Municipal or generate 0.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Mainstay Moderate Allocation  vs.  Nuveen California Municipal

 Performance 
       Timeline  
Mainstay Moderate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mainstay Moderate Allocation has generated negative risk-adjusted returns adding no value to fund investors. 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.
Nuveen California 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen California Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mainstay Moderate and Nuveen California Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mainstay Moderate and Nuveen California

The main advantage of trading using opposite Mainstay Moderate and Nuveen California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Moderate position performs unexpectedly, Nuveen California 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 Nuveen California will offset losses from the drop in Nuveen California's long position.
The idea behind Mainstay Moderate Allocation and Nuveen California Municipal 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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