Correlation Between Mainstay Growth and Ab Small

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

By analyzing existing cross correlation between Mainstay Growth Etf and Ab Small Cap, you can compare the effects of market volatilities on Mainstay Growth and Ab Small 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 Growth with a short position of Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Growth and Ab Small.

Diversification Opportunities for Mainstay Growth and Ab Small

0.81

Correlation Coefficient

Mainstay Growth  Ab Small

Very poor diversification

The 3 months correlation between Mainstay and QUAIX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Growth Etf and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap and Mainstay Growth 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 Growth Etf are associated (or correlated) with Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Mainstay Growth i.e., Mainstay Growth and Ab Small go up and down completely randomly.

Pair Corralation between Mainstay Growth and Ab Small

Assuming the 90 days horizon Mainstay Growth Etf is expected to under-perform the Ab Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mainstay Growth Etf is 1.21 times less risky than Ab Small. The mutual fund trades about -0.29 of its potential returns per unit of risk. The Ab Small Cap is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  7,791  in Ab Small Cap on October 10, 2024 and sell it today you would lose (296.00) from holding Ab Small Cap or give up 3.8% of portfolio value over 90 days.

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

Mainstay Growth Etf  vs.  Ab Small Cap

Mainstay Growth Etf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mainstay Growth Etf has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Mainstay Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ab Small 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 Growth and Ab Small

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

The idea behind Mainstay Growth Etf and Ab Small Cap 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.