Correlation Between Wealthbuilder Conservative and Mainstay

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

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

Diversification Opportunities for Wealthbuilder Conservative and Mainstay

-0.12

Correlation Coefficient

Wealthbuilder Conservative  Mainstay

Good diversification

The 3 months correlation between Wealthbuilder and Mainstay is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wealthbuilder Conservative All 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 Wealthbuilder Conservative 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 Wealthbuilder Conservative Allocation 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 Wealthbuilder Conservative i.e., Wealthbuilder Conservative and Mainstay go up and down completely randomly.

Pair Corralation between Wealthbuilder Conservative and Mainstay

Assuming the 90 days horizon Wealthbuilder Conservative Allocation is expected to generate 0.32 times more return on investment than Mainstay. However, Wealthbuilder Conservative Allocation is 3.16 times less risky than Mainstay. It trades about 0.04 of its potential returns per unit of risk. Mainstay Sp 500 is currently generating about -0.07 per unit of risk. If you would invest  872.00  in Wealthbuilder Conservative Allocation on December 24, 2024 and sell it today you would earn a total of  7.00  from holding Wealthbuilder Conservative Allocation or generate 0.8% return on investment over 90 days.

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

Wealthbuilder Conservative All  vs.  Mainstay Sp 500

Wealthbuilder Conservative

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wealthbuilder Conservative Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Wealthbuilder Conservative 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

Very Weak

Over the last 90 days Mainstay Sp 500 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward 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 Wealthbuilder Conservative and Mainstay

The main advantage of trading using opposite Wealthbuilder Conservative and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wealthbuilder Conservative 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 Wealthbuilder Conservative Allocation 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.