Correlation Between Mainstay Moderate and Muzinich High

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

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

Diversification Opportunities for Mainstay Moderate and Muzinich High

0.84

Correlation Coefficient

Mainstay Moderate  Muzinich High

Very poor diversification

The 3 months correlation between MainStay and Muzinich is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Moderate Allocation and Muzinich High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muzinich High Yield and Mainstay Moderate 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 Moderate Allocation are associated (or correlated) with Muzinich High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muzinich High Yield has no effect on the direction of Mainstay Moderate i.e., Mainstay Moderate and Muzinich High go up and down completely randomly.

Pair Corralation between Mainstay Moderate and Muzinich High

Assuming the 90 days horizon Mainstay Moderate Allocation is expected to generate 2.41 times more return on investment than Muzinich High. However, Mainstay Moderate is 2.41 times more volatile than Muzinich High Yield. It trades about 0.17 of its potential returns per unit of risk. Muzinich High Yield is currently generating about 0.25 per unit of risk. If you would invest  1,346  in Mainstay Moderate Allocation on May 5, 2025 and sell it today you would earn a total of  61.00  from holding Mainstay Moderate Allocation or generate 4.53% return on investment over 90 days.

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

Mainstay Moderate Allocation  vs.  Muzinich High Yield

Mainstay Moderate

Risk-Adjusted Performance

Good

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

Muzinich High Yield

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Muzinich High Yield are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Muzinich High 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 Moderate and Muzinich High

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

The idea behind Mainstay Moderate Allocation and Muzinich High Yield 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.