Correlation Between Mainstay Epoch and Mainstay Balanced

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

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

Diversification Opportunities for Mainstay Epoch and Mainstay Balanced

0.67

Correlation Coefficient

Mainstay Epoch  Mainstay Balanced

Poor diversification

The 3 months correlation between Mainstay and Mainstay is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Epoch Small and Mainstay Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Balanced and Mainstay Epoch 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 Epoch Small are associated (or correlated) with Mainstay Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Balanced has no effect on the direction of Mainstay Epoch i.e., Mainstay Epoch and Mainstay Balanced go up and down completely randomly.

Pair Corralation between Mainstay Epoch and Mainstay Balanced

Assuming the 90 days horizon Mainstay Epoch Small is expected to generate 1.82 times more return on investment than Mainstay Balanced. However, Mainstay Epoch is 1.82 times more volatile than Mainstay Balanced Fund. It trades about 0.15 of its potential returns per unit of risk. Mainstay Balanced Fund is currently generating about -0.04 per unit of risk. If you would invest  2,333  in Mainstay Epoch Small on September 13, 2024 and sell it today you would earn a total of  279.00  from holding Mainstay Epoch Small or generate 11.96% return on investment over 90 days.

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

Mainstay Epoch Small  vs.  Mainstay Balanced Fund

Mainstay Epoch Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Epoch Small are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mainstay Epoch may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mainstay Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Mainstay Epoch Small and Mainstay Balanced Fund 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.

Check out your portfolio center.

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.