Correlation Between Mainstay Moderate and Blackrock Health

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

Diversification Opportunities for Mainstay Moderate and Blackrock Health

0.07

Correlation Coefficient

Mainstay Moderate  Blackrock Health

Significant diversification

The 3 months correlation between Mainstay and Blackrock is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Moderate Allocation and Blackrock Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Health Sciences 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 Blackrock Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Health Sciences has no effect on the direction of Mainstay Moderate i.e., Mainstay Moderate and Blackrock Health go up and down completely randomly.

Pair Corralation between Mainstay Moderate and Blackrock Health

Assuming the 90 days horizon Mainstay Moderate Allocation is expected to generate 0.41 times more return on investment than Blackrock Health. However, Mainstay Moderate Allocation is 2.44 times less risky than Blackrock Health. It trades about -0.2 of its potential returns per unit of risk. Blackrock Health Sciences is currently generating about -0.29 per unit of risk. If you would invest  1,488  in Mainstay Moderate Allocation on September 27, 2024 and sell it today you would lose (34.00) from holding Mainstay Moderate Allocation or give up 2.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Mainstay Moderate Allocation  vs.  Blackrock Health Sciences

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

Blackrock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Mainstay Moderate and Blackrock Health

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

The idea behind Mainstay Moderate Allocation and Blackrock Health Sciences 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.