Correlation Between Mainstay Total and Mainstay Income

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

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

Diversification Opportunities for Mainstay Total and Mainstay Income

0.76

Correlation Coefficient

Mainstay Total  Mainstay Income

Poor diversification

The 3 months correlation between Mainstay and Mainstay is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Total Return and Mainstay Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Income Builder and Mainstay Total 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 Total Return are associated (or correlated) with Mainstay Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Income Builder has no effect on the direction of Mainstay Total i.e., Mainstay Total and Mainstay Income go up and down completely randomly.

Pair Corralation between Mainstay Total and Mainstay Income

Assuming the 90 days horizon Mainstay Total is expected to generate 1.85 times less return on investment than Mainstay Income. But when comparing it to its historical volatility, Mainstay Total Return is 1.29 times less risky than Mainstay Income. It trades about 0.04 of its potential returns per unit of risk. Mainstay Income Builder is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,750  in Mainstay Income Builder on September 29, 2024 and sell it today you would earn a total of  299.00  from holding Mainstay Income Builder or generate 17.09% return on investment over 90 days.

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

Mainstay Total Return  vs.  Mainstay Income Builder

Mainstay Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mainstay Income Builder

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Mainstay Total Return and Mainstay Income Builder 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.