Correlation Between Heartland Value and Mainstay Epoch

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

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

Diversification Opportunities for Heartland Value and Mainstay Epoch

-0.77

Correlation Coefficient

Heartland Value  Mainstay Epoch

Pay attention - limited upside

The 3 months correlation between Heartland and Mainstay is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Mainstay Epoch International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Inter and Heartland Value 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 Heartland Value Plus are associated (or correlated) with Mainstay Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Inter has no effect on the direction of Heartland Value i.e., Heartland Value and Mainstay Epoch go up and down completely randomly.

Pair Corralation between Heartland Value and Mainstay Epoch

Assuming the 90 days horizon Heartland Value Plus is expected to generate 1.6 times more return on investment than Mainstay Epoch. However, Heartland Value is 1.6 times more volatile than Mainstay Epoch International. It trades about 0.16 of its potential returns per unit of risk. Mainstay Epoch International is currently generating about -0.14 per unit of risk. If you would invest  3,621  in Heartland Value Plus on September 5, 2024 and sell it today you would earn a total of  429.00  from holding Heartland Value Plus or generate 11.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Heartland Value Plus  vs.  Mainstay Epoch International

Heartland Value Plus

Risk-Adjusted Performance

12 of 100

Good

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

Mainstay Epoch Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mainstay Epoch International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Heartland Value and Mainstay Epoch

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

The idea behind Heartland Value Plus and Mainstay Epoch International 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.