Correlation Between TRON and Mainstay Epoch

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

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

Diversification Opportunities for TRON and Mainstay Epoch

0.62

Correlation Coefficient

TRON  Mainstay Epoch

Poor diversification

The 3 months correlation between TRON and Mainstay is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Mainstay Epoch Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Equity and TRON 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 TRON 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 Equity has no effect on the direction of TRON i.e., TRON and Mainstay Epoch go up and down completely randomly.

Pair Corralation between TRON and Mainstay Epoch

Assuming the 90 days trading horizon TRON is expected to generate 1.65 times less return on investment than Mainstay Epoch. In addition to that, TRON is 6.81 times more volatile than Mainstay Epoch Equity. It trades about 0.02 of its total potential returns per unit of risk. Mainstay Epoch Equity is currently generating about 0.21 per unit of volatility. If you would invest  2,016  in Mainstay Epoch Equity on December 20, 2024 and sell it today you would earn a total of  100.00  from holding Mainstay Epoch Equity or generate 4.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.08%
Values	Daily Returns

TRON  vs.  Mainstay Epoch Equity

TRON

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TRON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mainstay Epoch Equity

Risk-Adjusted Performance

Solid

Over the last 90 days Mainstay Epoch Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak fundamental drivers, Mainstay Epoch may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TRON and Mainstay Epoch

The main advantage of trading using opposite TRON and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON 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 TRON and Mainstay Epoch Equity 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.