Correlation Between Small Cap and Mainstay Epoch

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Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Mainstay Epoch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Mainstay Epoch Small, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Mainstay Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Mainstay Epoch.

Diversification Opportunities for Small Cap and Mainstay Epoch

SmallMainstayDiversified AwaySmallMainstayDiversified Away100%
0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Small and Mainstay is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock 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 Small Cap 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 Small Cap Stock 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 Small Cap i.e., Small Cap and Mainstay Epoch go up and down completely randomly.

Pair Corralation between Small Cap and Mainstay Epoch

Assuming the 90 days horizon Small Cap Stock is expected to under-perform the Mainstay Epoch. In addition to that, Small Cap is 1.11 times more volatile than Mainstay Epoch Small. It trades about -0.07 of its total potential returns per unit of risk. Mainstay Epoch Small is currently generating about 0.06 per unit of volatility. If you would invest  1,862  in Mainstay Epoch Small on September 23, 2024 and sell it today you would earn a total of  89.00  from holding Mainstay Epoch Small or generate 4.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Small Cap Stock  vs.  Mainstay Epoch Small

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0510
JavaScript chart by amCharts 3.21.15USCAX MOPCX
       Timeline  
Small Cap Stock 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Small Cap Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec13.51414.515
Mainstay Epoch Small 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec18.51919.52020.521

Small Cap and Mainstay Epoch Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.46-1.86-1.27-0.68-0.09170.451.031.612.192.77 0.050.100.150.20
JavaScript chart by amCharts 3.21.15USCAX MOPCX
       Returns  

Pair Trading with Small Cap and Mainstay Epoch

The main advantage of trading using opposite Small Cap and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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 Small Cap Stock 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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