Correlation Between Titan Company and Mainstay Large

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

By analyzing existing cross correlation between Titan Company Limited and Mainstay Large Cap, you can compare the effects of market volatilities on Titan Company and Mainstay Large 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 Titan Company with a short position of Mainstay Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Company and Mainstay Large.

Diversification Opportunities for Titan Company and Mainstay Large

-0.66

Correlation Coefficient

Titan Company  Mainstay Large

Excellent diversification

The 3 months correlation between Titan and Mainstay is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap and Titan Company 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 Titan Company Limited are associated (or correlated) with Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of Titan Company i.e., Titan Company and Mainstay Large go up and down completely randomly.

Pair Corralation between Titan Company and Mainstay Large

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Mainstay Large. In addition to that, Titan Company is 1.35 times more volatile than Mainstay Large Cap. It trades about -0.09 of its total potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.19 per unit of volatility. If you would invest  1,100  in Mainstay Large Cap on September 13, 2024 and sell it today you would earn a total of  137.00  from holding Mainstay Large Cap or generate 12.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Titan Company Limited  vs.  Mainstay Large Cap

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Mainstay Large Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mainstay Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Titan Company and Mainstay Large

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

The idea behind Titan Company Limited and Mainstay Large Cap 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.