Correlation Between Mainstay Short and Disciplined Value

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

By analyzing existing cross correlation between Mainstay Short Duration and Disciplined Value Series, you can compare the effects of market volatilities on Mainstay Short and Disciplined Value 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 Short with a short position of Disciplined Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Short and Disciplined Value.

Diversification Opportunities for Mainstay Short and Disciplined Value

0.85

Correlation Coefficient

Mainstay Short  Disciplined Value

Very poor diversification

The 3 months correlation between Mainstay and Disciplined is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Short Duration and Disciplined Value Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Disciplined Value Series and Mainstay Short 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 Short Duration are associated (or correlated) with Disciplined Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Disciplined Value Series has no effect on the direction of Mainstay Short i.e., Mainstay Short and Disciplined Value go up and down completely randomly.

Pair Corralation between Mainstay Short and Disciplined Value

Assuming the 90 days horizon Mainstay Short is expected to generate 13.36 times less return on investment than Disciplined Value. But when comparing it to its historical volatility, Mainstay Short Duration is 7.94 times less risky than Disciplined Value. It trades about 0.12 of its potential returns per unit of risk. Disciplined Value Series is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  836.00  in Disciplined Value Series on September 6, 2024 and sell it today you would earn a total of  35.00  from holding Disciplined Value Series or generate 4.19% return on investment over 90 days.

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

Mainstay Short Duration  vs.  Disciplined Value Series

Mainstay Short Duration

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Short Duration are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Mainstay Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Disciplined Value Series

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Disciplined Value Series are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Disciplined Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mainstay Short and Disciplined Value

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

The idea behind Mainstay Short Duration and Disciplined Value Series 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.