Correlation Between Mondrian Global and Mainstay Tax

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

By analyzing existing cross correlation between Mondrian Global Equity and Mainstay Tax Free, you can compare the effects of market volatilities on Mondrian Global and Mainstay Tax 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 Mondrian Global with a short position of Mainstay Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mondrian Global and Mainstay Tax.

Diversification Opportunities for Mondrian Global and Mainstay Tax

0.35

Correlation Coefficient

Mondrian Global  Mainstay Tax

Weak diversification

The 3 months correlation between Mondrian and Mainstay is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mondrian Global Equity and Mainstay Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Tax Free and Mondrian Global 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 Mondrian Global Equity are associated (or correlated) with Mainstay Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Tax Free has no effect on the direction of Mondrian Global i.e., Mondrian Global and Mainstay Tax go up and down completely randomly.

Pair Corralation between Mondrian Global and Mainstay Tax

Assuming the 90 days horizon Mondrian Global Equity is expected to under-perform the Mainstay Tax. In addition to that, Mondrian Global is 2.4 times more volatile than Mainstay Tax Free. It trades about -0.08 of its total potential returns per unit of risk. Mainstay Tax Free is currently generating about -0.05 per unit of volatility. If you would invest  946.00  in Mainstay Tax Free on September 17, 2024 and sell it today you would lose (8.00) from holding Mainstay Tax Free or give up 0.85% of portfolio value over 90 days.

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

Mondrian Global Equity  vs.  Mainstay Tax Free

Mondrian Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mainstay Tax Free

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mondrian Global and Mainstay Tax

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

The idea behind Mondrian Global Equity and Mainstay Tax Free 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.