Correlation Between T Rowe and Mainstay

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

By analyzing existing cross correlation between T Rowe Price and Mainstay Sp 500, you can compare the effects of market volatilities on T Rowe and Mainstay 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 T Rowe with a short position of Mainstay. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Mainstay.

Diversification Opportunities for T Rowe and Mainstay

0.01

Correlation Coefficient

T Rowe  Mainstay

Significant diversification

The 3 months correlation between PRFHX and Mainstay is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 and T Rowe 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 T Rowe Price are associated (or correlated) with Mainstay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of T Rowe i.e., T Rowe and Mainstay go up and down completely randomly.

Pair Corralation between T Rowe and Mainstay

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Mainstay. But the mutual fund apears to be less risky and, when comparing its historical volatility, T Rowe Price is 2.44 times less risky than Mainstay. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Mainstay Sp 500 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5,978  in Mainstay Sp 500 on September 15, 2024 and sell it today you would earn a total of  455.00  from holding Mainstay Sp 500 or generate 7.61% return on investment over 90 days.

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

T Rowe Price  vs.  Mainstay Sp 500

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mainstay Sp 500

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Sp 500 are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mainstay may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with T Rowe and Mainstay

The main advantage of trading using opposite T Rowe and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Mainstay 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 will offset losses from the drop in Mainstay's long position.

The idea behind T Rowe Price and Mainstay Sp 500 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .