Correlation Between Mainstay Nerstone and Western Asset

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

By analyzing existing cross correlation between Mainstay Nerstone Growth and Western Asset Diversified, you can compare the effects of market volatilities on Mainstay Nerstone and Western Asset 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 Mainstay Nerstone with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Nerstone and Western Asset.

Diversification Opportunities for Mainstay Nerstone and Western Asset

-0.37

Correlation Coefficient

Mainstay Nerstone  Western Asset

Very good diversification

The 3 months correlation between Mainstay and Western is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Nerstone Growth and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified and Mainstay Nerstone 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 Mainstay Nerstone Growth are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Mainstay Nerstone i.e., Mainstay Nerstone and Western Asset go up and down completely randomly.

Pair Corralation between Mainstay Nerstone and Western Asset

Assuming the 90 days horizon Mainstay Nerstone Growth is expected to generate 4.57 times more return on investment than Western Asset. However, Mainstay Nerstone is 4.57 times more volatile than Western Asset Diversified. It trades about 0.0 of its potential returns per unit of risk. Western Asset Diversified is currently generating about -0.21 per unit of risk. If you would invest  4,254  in Mainstay Nerstone Growth on September 25, 2024 and sell it today you would lose (9.00) from holding Mainstay Nerstone Growth or give up 0.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Mainstay Nerstone Growth  vs.  Western Asset Diversified

Mainstay Nerstone Growth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Nerstone Growth are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Mainstay Nerstone is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mainstay Nerstone and Western Asset

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

The idea behind Mainstay Nerstone Growth and Western Asset Diversified 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.