Correlation Between Mayfield Childcare and FleetPartners

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

By analyzing existing cross correlation between Mayfield Childcare and FleetPartners Group, you can compare the effects of market volatilities on Mayfield Childcare and FleetPartners 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 Mayfield Childcare with a short position of FleetPartners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayfield Childcare and FleetPartners.

Diversification Opportunities for Mayfield Childcare and FleetPartners

0.55

Correlation Coefficient

Mayfield Childcare  FleetPartners

Very weak diversification

The 3 months correlation between Mayfield and FleetPartners is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mayfield Childcare and FleetPartners Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FleetPartners Group and Mayfield Childcare 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 Mayfield Childcare are associated (or correlated) with FleetPartners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FleetPartners Group has no effect on the direction of Mayfield Childcare i.e., Mayfield Childcare and FleetPartners go up and down completely randomly.

Pair Corralation between Mayfield Childcare and FleetPartners

Assuming the 90 days trading horizon Mayfield Childcare is expected to generate 2.6 times more return on investment than FleetPartners. However, Mayfield Childcare is 2.6 times more volatile than FleetPartners Group. It trades about -0.24 of its potential returns per unit of risk. FleetPartners Group is currently generating about -0.86 per unit of risk. If you would invest  52.00  in Mayfield Childcare on October 9, 2024 and sell it today you would lose (7.00) from holding Mayfield Childcare or give up 13.46% of portfolio value over 90 days.

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

Mayfield Childcare  vs.  FleetPartners Group

Mayfield Childcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayfield Childcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

FleetPartners Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FleetPartners Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mayfield Childcare and FleetPartners

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

The idea behind Mayfield Childcare and FleetPartners Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.