Correlation Between Lebenthal Lisanti and Mainstay Large

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

By analyzing existing cross correlation between Lebenthal Lisanti Small and Mainstay Large Cap, you can compare the effects of market volatilities on Lebenthal Lisanti and Mainstay Large 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 Lebenthal Lisanti with a short position of Mainstay Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lebenthal Lisanti and Mainstay Large.

Diversification Opportunities for Lebenthal Lisanti and Mainstay Large

0.89

Correlation Coefficient

Lebenthal Lisanti  Mainstay Large

Very poor diversification

The 3 months correlation between Lebenthal and Mainstay is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lebenthal Lisanti Small and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap and Lebenthal Lisanti 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 Lebenthal Lisanti Small are associated (or correlated) with Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of Lebenthal Lisanti i.e., Lebenthal Lisanti and Mainstay Large go up and down completely randomly.

Pair Corralation between Lebenthal Lisanti and Mainstay Large

Assuming the 90 days horizon Lebenthal Lisanti is expected to generate 1.73 times less return on investment than Mainstay Large. In addition to that, Lebenthal Lisanti is 1.14 times more volatile than Mainstay Large Cap. It trades about 0.05 of its total potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.09 per unit of volatility. If you would invest  724.00  in Mainstay Large Cap on October 9, 2024 and sell it today you would earn a total of  489.00  from holding Mainstay Large Cap or generate 67.54% return on investment over 90 days.

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

Lebenthal Lisanti Small  vs.  Mainstay Large Cap

Lebenthal Lisanti Small

Risk-Adjusted Performance

5 of 100

Modest

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

Mainstay Large Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Large Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mainstay Large may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lebenthal Lisanti and Mainstay Large

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

The idea behind Lebenthal Lisanti Small and Mainstay Large Cap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.