Correlation Between Mainstay Moderate and Matson Money

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

Diversification Opportunities for Mainstay Moderate and Matson Money

0.75

Correlation Coefficient

Mainstay Moderate  Matson Money

Poor diversification

The 3 months correlation between Mainstay and Matson is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Moderate Allocation and Matson Money Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Money Equity 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 Matson Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Money Equity has no effect on the direction of Mainstay Moderate i.e., Mainstay Moderate and Matson Money go up and down completely randomly.

Pair Corralation between Mainstay Moderate and Matson Money

Assuming the 90 days horizon Mainstay Moderate Allocation is expected to generate 0.64 times more return on investment than Matson Money. However, Mainstay Moderate Allocation is 1.56 times less risky than Matson Money. It trades about -0.19 of its potential returns per unit of risk. Matson Money Equity is currently generating about -0.3 per unit of risk. If you would invest  1,501  in Mainstay Moderate Allocation on September 28, 2024 and sell it today you would lose (32.00) from holding Mainstay Moderate Allocation or give up 2.13% of portfolio value over 90 days.

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

Mainstay Moderate Allocation  vs.  Matson Money Equity

Mainstay Moderate

Risk-Adjusted Performance

0 of 100

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 forward indicators, Mainstay Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Matson Money Equity

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Matson Money Equity are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Matson Money 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 Matson Money

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

The idea behind Mainstay Moderate Allocation and Matson Money Equity 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.