Correlation Between Davis Financial and Mainstay Epoch
Can any of the company-specific risk be diversified away by investing in both Davis Financial 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 Davis Financial and Mainstay Epoch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Financial Fund and Mainstay Epoch Global, you can compare the effects of market volatilities on Davis Financial 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 Davis Financial with a short position of Mainstay Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Mainstay Epoch.
Diversification Opportunities for Davis Financial and Mainstay Epoch
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Davis and Mainstay is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Mainstay Epoch Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Global and Davis Financial 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 Davis Financial Fund 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 Global has no effect on the direction of Davis Financial i.e., Davis Financial and Mainstay Epoch go up and down completely randomly.
Pair Corralation between Davis Financial and Mainstay Epoch
Assuming the 90 days horizon Davis Financial Fund is expected to generate 1.66 times more return on investment than Mainstay Epoch. However, Davis Financial is 1.66 times more volatile than Mainstay Epoch Global. It trades about 0.08 of its potential returns per unit of risk. Mainstay Epoch Global is currently generating about 0.09 per unit of risk. If you would invest 4,654 in Davis Financial Fund on August 30, 2024 and sell it today you would earn a total of 2,414 from holding Davis Financial Fund or generate 51.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Davis Financial Fund vs. Mainstay Epoch Global
Performance |
| Timeline |
| Davis Financial |
| Mainstay Epoch Global |
Davis Financial and Mainstay Epoch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and Mainstay Epoch
The main advantage of trading using opposite Davis Financial and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial 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.| Davis Financial vs. HUMANA INC | Davis Financial vs. Aquagold International | Davis Financial vs. Barloworld Ltd ADR | Davis Financial vs. Morningstar Unconstrained Allocation |
| Mainstay Epoch vs. 1919 Financial Services | Mainstay Epoch vs. Davis Financial Fund | Mainstay Epoch vs. First Trust Specialty | Mainstay Epoch vs. Financials Ultrasector Profund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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