Correlation Between Main Street and Mene
Can any of the company-specific risk be diversified away by investing in both Main Street and Mene 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 Main Street and Mene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and Mene Inc, you can compare the effects of market volatilities on Main Street and Mene 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 Main Street with a short position of Mene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Mene.
Diversification Opportunities for Main Street and Mene
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Main and Mene is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Mene Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mene Inc and Main Street 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 Main Street Capital are associated (or correlated) with Mene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mene Inc has no effect on the direction of Main Street i.e., Main Street and Mene go up and down completely randomly.
Pair Corralation between Main Street and Mene
Given the investment horizon of 90 days Main Street Capital is expected to under-perform the Mene. But the stock apears to be less risky and, when comparing its historical volatility, Main Street Capital is 5.94 times less risky than Mene. The stock trades about -0.11 of its potential returns per unit of risk. The Mene Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 8.10 in Mene Inc on November 29, 2024 and sell it today you would earn a total of 1.66 from holding Mene Inc or generate 20.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. Mene Inc
Performance |
| Timeline |
| Main Street Capital |
| Mene Inc |
Main Street and Mene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Mene
The main advantage of trading using opposite Main Street and Mene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Mene 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 Mene will offset losses from the drop in Mene's long position.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
| Mene vs. Lanvin Group Holdings | Mene vs. MYT Netherlands Parent | Mene vs. Movado Group | Mene vs. Birks Group |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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