Correlation Between Mainstay Epoch and T Rowe

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

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

Diversification Opportunities for Mainstay Epoch and T Rowe

0.28

Correlation Coefficient

Mainstay Epoch  T Rowe

Modest diversification

The 3 months correlation between Mainstay and PAVLX is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Epoch Small and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price and Mainstay Epoch 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 Mainstay Epoch Small are associated (or correlated) with T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Mainstay Epoch i.e., Mainstay Epoch and T Rowe go up and down completely randomly.

Pair Corralation between Mainstay Epoch and T Rowe

Assuming the 90 days horizon Mainstay Epoch Small is expected to generate 1.05 times more return on investment than T Rowe. However, Mainstay Epoch is 1.05 times more volatile than T Rowe Price. It trades about 0.1 of its potential returns per unit of risk. T Rowe Price is currently generating about -0.17 per unit of risk. If you would invest  1,842  in Mainstay Epoch Small on September 23, 2024 and sell it today you would earn a total of  109.00  from holding Mainstay Epoch Small or generate 5.92% return on investment over 90 days.

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

Mainstay Epoch Small  vs.  T Rowe Price

Mainstay Epoch Small

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Epoch Small are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Mainstay Epoch is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Rowe Price 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 Mainstay Epoch and T Rowe

The main advantage of trading using opposite Mainstay Epoch and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Epoch position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Mainstay Epoch Small and T Rowe Price 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.