Correlation Between Mainstay Large and Chartwell Small
Can any of the company-specific risk be diversified away by investing in both Mainstay Large and Chartwell Small 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 Mainstay Large and Chartwell Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Large Cap and Chartwell Small Cap, you can compare the effects of market volatilities on Mainstay Large and Chartwell Small 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 Mainstay Large with a short position of Chartwell Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Large and Chartwell Small.
Diversification Opportunities for Mainstay Large and Chartwell Small
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mainstay and Chartwell is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Large Cap and Chartwell Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Small Cap and Mainstay Large 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 Mainstay Large Cap are associated (or correlated) with Chartwell Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Small Cap has no effect on the direction of Mainstay Large i.e., Mainstay Large and Chartwell Small go up and down completely randomly.
Pair Corralation between Mainstay Large and Chartwell Small
Assuming the 90 days horizon Mainstay Large is expected to generate 3.67 times less return on investment than Chartwell Small. But when comparing it to its historical volatility, Mainstay Large Cap is 1.42 times less risky than Chartwell Small. It trades about 0.1 of its potential returns per unit of risk. Chartwell Small Cap is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,094 in Chartwell Small Cap on August 30, 2024 and sell it today you would earn a total of 203.00 from holding Chartwell Small Cap or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Large Cap vs. Chartwell Small Cap
Performance |
| Timeline |
| Mainstay Large Cap |
| Chartwell Small Cap |
Mainstay Large and Chartwell Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Large and Chartwell Small
The main advantage of trading using opposite Mainstay Large and Chartwell Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Large position performs unexpectedly, Chartwell Small 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 Chartwell Small will offset losses from the drop in Chartwell Small's long position.| Mainstay Large vs. Tax Managed Mid Small | Mainstay Large vs. Chartwell Small Cap | Mainstay Large vs. Touchstone Small Cap | Mainstay Large vs. Ancorathelen Small Mid Cap |
| Chartwell Small vs. Vanguard Small Cap Value | Chartwell Small vs. Vanguard Small Cap Value | Chartwell Small vs. American Beacon Small |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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