Correlation Between Enhanced and Mainstay International

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

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

Diversification Opportunities for Enhanced and Mainstay International

-0.33

Correlation Coefficient

Enhanced  Mainstay International

Very good diversification

The 3 months correlation between Enhanced and Mainstay is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany and Mainstay International Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay International and Enhanced 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 Enhanced Large Pany are associated (or correlated) with Mainstay International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay International has no effect on the direction of Enhanced i.e., Enhanced and Mainstay International go up and down completely randomly.

Pair Corralation between Enhanced and Mainstay International

Assuming the 90 days horizon Enhanced Large Pany is expected to under-perform the Mainstay International. In addition to that, Enhanced is 1.25 times more volatile than Mainstay International Opportunities. It trades about -0.07 of its total potential returns per unit of risk. Mainstay International Opportunities is currently generating about 0.17 per unit of volatility. If you would invest  767.00  in Mainstay International Opportunities on December 25, 2024 and sell it today you would earn a total of  62.00  from holding Mainstay International Opportunities or generate 8.08% return on investment over 90 days.

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

Enhanced Large Pany  vs.  Mainstay International Opportu

Enhanced Large Pany

Risk-Adjusted Performance

Very Weak

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

Mainstay International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay International Opportunities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mainstay International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Enhanced and Mainstay International

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

The idea behind Enhanced Large Pany and Mainstay International Opportunities 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.