Correlation Between Deutsche Real and Mainstay Epoch

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

Diversification Opportunities for Deutsche Real and Mainstay Epoch

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Deutsche and Mainstay is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Real Estate 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 Deutsche Real 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 Deutsche Real Estate 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 Deutsche Real i.e., Deutsche Real and Mainstay Epoch go up and down completely randomly.

Pair Corralation between Deutsche Real and Mainstay Epoch

Assuming the 90 days horizon Deutsche Real Estate is expected to generate 0.48 times more return on investment than Mainstay Epoch. However, Deutsche Real Estate is 2.08 times less risky than Mainstay Epoch. It trades about 0.0 of its potential returns per unit of risk. Mainstay Epoch Global is currently generating about -0.21 per unit of risk. If you would invest  2,300  in Deutsche Real Estate on September 13, 2024 and sell it today you would lose (1.00) from holding Deutsche Real Estate or give up 0.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Deutsche Real Estate  vs.  Mainstay Epoch Global

 Performance 
       Timeline  
Deutsche Real Estate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Deutsche Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Deutsche Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Mainstay Epoch Global 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mainstay Epoch Global 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.

Deutsche Real and Mainstay Epoch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche Real and Mainstay Epoch

The main advantage of trading using opposite Deutsche Real and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Real 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 Deutsche Real Estate and Mainstay Epoch Global 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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