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 Small, 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
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DAVIS and Mainstay is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund 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 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 Small 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 0.81 times more return on investment than Mainstay Epoch. However, Davis Financial Fund is 1.24 times less risky than Mainstay Epoch. It trades about 0.15 of its potential returns per unit of risk. Mainstay Epoch Small is currently generating about 0.08 per unit of risk. If you would invest 5,401 in Davis Financial Fund on September 1, 2024 and sell it today you would earn a total of 1,678 from holding Davis Financial Fund or generate 31.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Davis Financial Fund vs. Mainstay Epoch Small
Performance |
| Timeline |
| Davis Financial |
| Mainstay Epoch Small |
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. Davis International Fund | Davis Financial vs. Davis International Fund | Davis Financial vs. Davis International Fund | Davis Financial vs. Davis Real Estate |
| Mainstay Epoch vs. Franklin Government Money | Mainstay Epoch vs. Transamerica Funds | Mainstay Epoch vs. T Rowe Price | Mainstay Epoch vs. T Rowe Price |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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