Correlation Between NYSE Composite and Mainstay Common

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

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

Diversification Opportunities for NYSE Composite and Mainstay Common

0.9

Correlation Coefficient

NYSE Composite  Mainstay Common

Almost no diversification

The 3 months correlation between NYSE and Mainstay is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Mainstay Mon Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Mon Stock and NYSE Composite 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 NYSE Composite are associated (or correlated) with Mainstay Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Mon Stock has no effect on the direction of NYSE Composite i.e., NYSE Composite and Mainstay Common go up and down completely randomly.

Pair Corralation between NYSE Composite and Mainstay Common

Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.76 times more return on investment than Mainstay Common. However, NYSE Composite is 1.32 times less risky than Mainstay Common. It trades about 0.0 of its potential returns per unit of risk. Mainstay Mon Stock is currently generating about -0.01 per unit of risk. If you would invest  1,959,424  in NYSE Composite on October 23, 2024 and sell it today you would earn a total of  1,313  from holding NYSE Composite or generate 0.07% return on investment over 90 days.

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

NYSE Composite  vs.  Mainstay Mon Stock

Pair Trading with NYSE Composite and Mainstay Common

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

The idea behind NYSE Composite and Mainstay Mon Stock 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.