Correlation Between Old Westbury and Mainstay Moderate

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

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

Diversification Opportunities for Old Westbury and Mainstay Moderate

0.89

Correlation Coefficient

Old Westbury  Mainstay Moderate

Very poor diversification

The 3 months correlation between Old and Mainstay is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate and Old Westbury 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 Old Westbury Large are associated (or correlated) with Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of Old Westbury i.e., Old Westbury and Mainstay Moderate go up and down completely randomly.

Pair Corralation between Old Westbury and Mainstay Moderate

Assuming the 90 days horizon Old Westbury Large is expected to under-perform the Mainstay Moderate. In addition to that, Old Westbury is 1.46 times more volatile than Mainstay Moderate Allocation. It trades about -0.02 of its total potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about -0.03 per unit of volatility. If you would invest  1,403  in Mainstay Moderate Allocation on October 26, 2024 and sell it today you would lose (18.00) from holding Mainstay Moderate Allocation or give up 1.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Old Westbury Large  vs.  Mainstay Moderate Allocation

Old Westbury Large

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mainstay Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Old Westbury and Mainstay Moderate

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

The idea behind Old Westbury Large and Mainstay Moderate Allocation 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.