Correlation Between Mainstay Moderate and Mainstay Conservative

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

Diversification Opportunities for Mainstay Moderate and Mainstay Conservative

0.95

Correlation Coefficient

Mainstay Moderate  Mainstay Conservative

Almost no diversification

The 3 months correlation between Mainstay and Mainstay is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Moderate Allocation and Mainstay Servative Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Conservative 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 Mainstay Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Conservative has no effect on the direction of Mainstay Moderate i.e., Mainstay Moderate and Mainstay Conservative go up and down completely randomly.

Pair Corralation between Mainstay Moderate and Mainstay Conservative

Assuming the 90 days horizon Mainstay Moderate Allocation is expected to under-perform the Mainstay Conservative. In addition to that, Mainstay Moderate is 1.44 times more volatile than Mainstay Servative Allocation. It trades about -0.11 of its total potential returns per unit of risk. Mainstay Servative Allocation is currently generating about -0.15 per unit of volatility. If you would invest  1,203  in Mainstay Servative Allocation on December 2, 2024 and sell it today you would lose (12.00) from holding Mainstay Servative Allocation or give up 1.0% of portfolio value over 90 days.

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

Mainstay Moderate Allocation  vs.  Mainstay Servative Allocation

Mainstay Moderate

Risk-Adjusted Performance

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.

Mainstay Conservative

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mainstay Servative Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Mainstay Conservative 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 Moderate and Mainstay Conservative

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

The idea behind Mainstay Moderate Allocation and Mainstay Servative Allocation 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.