Correlation Between Microsoft and Mainstay Conservative

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

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

Diversification Opportunities for Microsoft and Mainstay Conservative

0.25

Correlation Coefficient

Microsoft  Mainstay Conservative

Modest diversification

The 3 months correlation between Microsoft and MainStay is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Mainstay Conservative Etf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Conservative Etf and Microsoft 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 Microsoft are associated (or correlated) with Mainstay Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Conservative Etf has no effect on the direction of Microsoft i.e., Microsoft and Mainstay Conservative go up and down completely randomly.

Pair Corralation between Microsoft and Mainstay Conservative

Given the investment horizon of 90 days Microsoft is expected to generate 2.75 times more return on investment than Mainstay Conservative. However, Microsoft is 2.75 times more volatile than Mainstay Conservative Etf. It trades about 0.05 of its potential returns per unit of risk. Mainstay Conservative Etf is currently generating about 0.07 per unit of risk. If you would invest  37,145  in Microsoft on October 3, 2024 and sell it today you would earn a total of  5,338  from holding Microsoft or generate 14.37% return on investment over 90 days.

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

Microsoft  vs.  Mainstay Conservative Etf

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Mainstay Conservative Etf

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Microsoft and Mainstay Conservative

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

The idea behind Microsoft and Mainstay Conservative Etf 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.