Correlation Between Vanguard Total and Mainstay

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

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

Diversification Opportunities for Vanguard Total and Mainstay

0.99

Correlation Coefficient

Vanguard Total  Mainstay

No risk reduction

The 3 months correlation between Vanguard and Mainstay is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock 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 Vanguard Total 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 Vanguard Total Stock 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 Vanguard Total i.e., Vanguard Total and Mainstay go up and down completely randomly.

Pair Corralation between Vanguard Total and Mainstay

Assuming the 90 days horizon Vanguard Total Stock is expected to under-perform the Mainstay. In addition to that, Vanguard Total is 1.03 times more volatile than Mainstay Sp 500. It trades about -0.1 of its total potential returns per unit of risk. Mainstay Sp 500 is currently generating about -0.06 per unit of volatility. If you would invest  6,434  in Mainstay Sp 500 on October 9, 2024 and sell it today you would lose (79.00) from holding Mainstay Sp 500 or give up 1.23% of portfolio value over 90 days.

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

Vanguard Total Stock  vs.  Mainstay Sp 500

Vanguard Total Stock

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Vanguard Total 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

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Sp 500 are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mainstay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and Mainstay

The main advantage of trading using opposite Vanguard Total and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Vanguard Total Stock 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.