Correlation Between Mainstay Total and Mainstay High

Can any of the company-specific risk be diversified away by investing in both Mainstay Total and Mainstay High 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 High 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 High Yield, you can compare the effects of market volatilities on Mainstay Total and Mainstay High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Total and Mainstay High.

Diversification Opportunities for Mainstay Total and Mainstay High

0.73

Correlation Coefficient

Mainstay Total  Mainstay High

Poor diversification

The 3 months correlation between Mainstay and Mainstay is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Total Return and Mainstay High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay High Yield has no effect on the direction of Mainstay Total i.e., Mainstay Total and Mainstay High go up and down completely randomly.

Pair Corralation between Mainstay Total and Mainstay High

Assuming the 90 days horizon Mainstay Total Return is expected to generate 1.8 times more return on investment than Mainstay High. However, Mainstay Total is 1.8 times more volatile than Mainstay High Yield. It trades about 0.15 of its potential returns per unit of risk. Mainstay High Yield is currently generating about 0.1 per unit of risk. If you would invest  902.00  in Mainstay Total Return on December 30, 2024 and sell it today you would earn a total of  25.00  from holding Mainstay Total Return or generate 2.77% 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 High Yield

Mainstay Total Return

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Total Return are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay High Yield are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mainstay High 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 High

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

The idea behind Mainstay Total Return and Mainstay High Yield 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.