Correlation Between Ultrasmall Cap and Mainstay Tax

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

By analyzing existing cross correlation between Ultrasmall Cap Profund Ultrasmall Cap and Mainstay Tax Free, you can compare the effects of market volatilities on Ultrasmall Cap and Mainstay Tax 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 Ultrasmall Cap with a short position of Mainstay Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrasmall Cap and Mainstay Tax.

Diversification Opportunities for Ultrasmall Cap and Mainstay Tax

-0.32

Correlation Coefficient

Ultrasmall Cap  Mainstay Tax

Very good diversification

The 3 months correlation between Ultrasmall and Mainstay is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ultrasmall Cap Profund Ultrasm and Mainstay Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Tax Free and Ultrasmall Cap 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 Ultrasmall Cap Profund Ultrasmall Cap are associated (or correlated) with Mainstay Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Tax Free has no effect on the direction of Ultrasmall Cap i.e., Ultrasmall Cap and Mainstay Tax go up and down completely randomly.

Pair Corralation between Ultrasmall Cap and Mainstay Tax

Assuming the 90 days horizon Ultrasmall Cap Profund Ultrasmall Cap is expected to under-perform the Mainstay Tax. In addition to that, Ultrasmall Cap is 10.8 times more volatile than Mainstay Tax Free. It trades about -0.12 of its total potential returns per unit of risk. Mainstay Tax Free is currently generating about 0.08 per unit of volatility. If you would invest  923.00  in Mainstay Tax Free on December 26, 2024 and sell it today you would earn a total of  6.00  from holding Mainstay Tax Free or generate 0.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.33%
Values	Daily Returns

Ultrasmall Cap Profund Ultrasm  vs.  Mainstay Tax Free

Ultrasmall Cap Profund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultrasmall Cap Profund Ultrasmall Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Mainstay Tax Free

Risk-Adjusted Performance

Modest

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

Pair Trading with Ultrasmall Cap and Mainstay Tax

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

The idea behind Ultrasmall Cap Profund Ultrasmall Cap and Mainstay Tax Free 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.