Correlation Between Mainstay Total and Scharf Global

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

By analyzing existing cross correlation between Mainstay Total Return and Scharf Global Opportunity, you can compare the effects of market volatilities on Mainstay Total and Scharf Global 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 Total with a short position of Scharf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Total and Scharf Global.

Diversification Opportunities for Mainstay Total and Scharf Global

0.54

Correlation Coefficient

Mainstay Total  Scharf Global

Very weak diversification

The 3 months correlation between Mainstay and Scharf is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Total Return and Scharf Global Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Global Opportunity and Mainstay Total 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 Total Return are associated (or correlated) with Scharf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scharf Global Opportunity has no effect on the direction of Mainstay Total i.e., Mainstay Total and Scharf Global go up and down completely randomly.

Pair Corralation between Mainstay Total and Scharf Global

Assuming the 90 days horizon Mainstay Total is expected to generate 1.63 times less return on investment than Scharf Global. But when comparing it to its historical volatility, Mainstay Total Return is 1.65 times less risky than Scharf Global. It trades about 0.04 of its potential returns per unit of risk. Scharf Global Opportunity is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,083  in Scharf Global Opportunity on September 28, 2024 and sell it today you would earn a total of  453.00  from holding Scharf Global Opportunity or generate 14.69% return on investment over 90 days.

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

Mainstay Total Return  vs.  Scharf Global Opportunity

Mainstay Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Scharf Global Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mainstay Total and Scharf Global

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

The idea behind Mainstay Total Return and Scharf Global Opportunity 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.