Correlation Between Mesirow Financial and Mainstay Balanced

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

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

Diversification Opportunities for Mesirow Financial and Mainstay Balanced

0.73

Correlation Coefficient

Mesirow Financial  Mainstay Balanced

Poor diversification

The 3 months correlation between Mesirow and Mainstay is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial 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 Mesirow Financial 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 Mesirow Financial 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 Mesirow Financial i.e., Mesirow Financial and Mainstay Balanced go up and down completely randomly.

Pair Corralation between Mesirow Financial and Mainstay Balanced

Assuming the 90 days horizon Mesirow Financial Small is expected to under-perform the Mainstay Balanced. In addition to that, Mesirow Financial is 2.41 times more volatile than Mainstay Balanced Fund. It trades about -0.17 of its total potential returns per unit of risk. Mainstay Balanced Fund is currently generating about -0.11 per unit of volatility. If you would invest  3,215  in Mainstay Balanced Fund on December 4, 2024 and sell it today you would lose (142.00) from holding Mainstay Balanced Fund or give up 4.42% of portfolio value over 90 days.

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

Mesirow Financial Small  vs.  Mainstay Balanced Fund

Mesirow Financial Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesirow Financial Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Mainstay Balanced

Risk-Adjusted Performance

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 fundamental 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 Mesirow Financial and Mainstay Balanced

The main advantage of trading using opposite Mesirow Financial and Mainstay Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial 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 Mesirow Financial 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.