Correlation Between Glg Intl and Mainstay Large

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

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

Diversification Opportunities for Glg Intl and Mainstay Large

-0.23

Correlation Coefficient

Glg Intl  Mainstay Large

Very good diversification

The 3 months correlation between Glg and Mainstay is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl 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 Glg Intl 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 Glg Intl 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 Glg Intl i.e., Glg Intl and Mainstay Large go up and down completely randomly.

Pair Corralation between Glg Intl and Mainstay Large

Assuming the 90 days horizon Glg Intl Small is expected to under-perform the Mainstay Large. In addition to that, Glg Intl is 1.1 times more volatile than Mainstay Large Cap. It trades about -0.02 of its total potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.08 per unit of volatility. If you would invest  439.00  in Mainstay Large Cap on December 20, 2024 and sell it today you would earn a total of  15.00  from holding Mainstay Large Cap or generate 3.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	69.49%
Values	Daily Returns

Glg Intl Small  vs.  Mainstay Large Cap

Glg Intl Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Glg Intl Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Glg Intl 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

Modest

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

Pair Trading with Glg Intl and Mainstay Large

The main advantage of trading using opposite Glg Intl and Mainstay Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl 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 Glg Intl 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .