Correlation Between Short Real and Mainstay Epoch

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

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

Diversification Opportunities for Short Real and Mainstay Epoch

-0.2

Correlation Coefficient

Short Real  Mainstay Epoch

Good diversification

The 3 months correlation between Short and Mainstay is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Short Real Estate and Mainstay Epoch Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Small and Short Real 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 Short Real Estate 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 Small has no effect on the direction of Short Real i.e., Short Real and Mainstay Epoch go up and down completely randomly.

Pair Corralation between Short Real and Mainstay Epoch

Assuming the 90 days horizon Short Real is expected to generate 1.21 times less return on investment than Mainstay Epoch. But when comparing it to its historical volatility, Short Real Estate is 1.17 times less risky than Mainstay Epoch. It trades about 0.09 of its potential returns per unit of risk. Mainstay Epoch Small is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,865  in Mainstay Epoch Small on October 26, 2024 and sell it today you would earn a total of  145.00  from holding Mainstay Epoch Small or generate 7.77% return on investment over 90 days.

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

Short Real Estate  vs.  Mainstay Epoch Small

Short Real Estate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Real Estate are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Real may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mainstay Epoch Small

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Epoch Small are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Mainstay Epoch may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Short Real and Mainstay Epoch

The main advantage of trading using opposite Short Real and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Real 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 Short Real Estate and Mainstay Epoch Small 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.