Correlation Between MSCI ACWI and Mainstay Balanced

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

By analyzing existing cross correlation between MSCI ACWI exAUCONSUMER and Mainstay Balanced Fund, you can compare the effects of market volatilities on MSCI ACWI and Mainstay Balanced 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 MSCI ACWI with a short position of Mainstay Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI ACWI and Mainstay Balanced.

Diversification Opportunities for MSCI ACWI and Mainstay Balanced

-0.04

Correlation Coefficient

MSCI ACWI  Mainstay Balanced

Good diversification

The 3 months correlation between MSCI and Mainstay is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding MSCI ACWI exAUCONSUMER and Mainstay Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Balanced and MSCI ACWI 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 MSCI ACWI exAUCONSUMER are associated (or correlated) with Mainstay Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Balanced has no effect on the direction of MSCI ACWI i.e., MSCI ACWI and Mainstay Balanced go up and down completely randomly.

Pair Corralation between MSCI ACWI and Mainstay Balanced

Assuming the 90 days horizon MSCI ACWI exAUCONSUMER is expected to generate 0.34 times more return on investment than Mainstay Balanced. However, MSCI ACWI exAUCONSUMER is 2.96 times less risky than Mainstay Balanced. It trades about 0.06 of its potential returns per unit of risk. Mainstay Balanced Fund is currently generating about -0.1 per unit of risk. If you would invest  2,470  in MSCI ACWI exAUCONSUMER on October 6, 2024 and sell it today you would earn a total of  23.00  from holding MSCI ACWI exAUCONSUMER or generate 0.93% return on investment over 90 days.

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

MSCI ACWI exAUCONSUMER  vs.  Mainstay Balanced Fund

MSCI ACWI exAUCONSUMER

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI ACWI exAUCONSUMER are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, MSCI ACWI is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Mainstay Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with MSCI ACWI and Mainstay Balanced

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

The idea behind MSCI ACWI exAUCONSUMER and Mainstay Balanced Fund 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.