Correlation Between MainStay CBRE and XAI Octagon

Can any of the company-specific risk be diversified away by investing in both MainStay CBRE and XAI Octagon 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 CBRE and XAI Octagon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MainStay CBRE Global and XAI Octagon Floating, you can compare the effects of market volatilities on MainStay CBRE and XAI Octagon 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 CBRE with a short position of XAI Octagon. Check out your portfolio center. Please also check ongoing floating volatility patterns of MainStay CBRE and XAI Octagon.

Diversification Opportunities for MainStay CBRE and XAI Octagon

-0.57

Correlation Coefficient

MainStay CBRE  XAI Octagon

Excellent diversification

The 3 months correlation between MainStay and XAI is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding MainStay CBRE Global and XAI Octagon Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAI Octagon Floating and MainStay CBRE 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 CBRE Global are associated (or correlated) with XAI Octagon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAI Octagon Floating has no effect on the direction of MainStay CBRE i.e., MainStay CBRE and XAI Octagon go up and down completely randomly.

Pair Corralation between MainStay CBRE and XAI Octagon

Given the investment horizon of 90 days MainStay CBRE is expected to generate 3.64 times less return on investment than XAI Octagon. In addition to that, MainStay CBRE is 3.21 times more volatile than XAI Octagon Floating. It trades about 0.02 of its total potential returns per unit of risk. XAI Octagon Floating is currently generating about 0.28 per unit of volatility. If you would invest  664.00  in XAI Octagon Floating on August 31, 2024 and sell it today you would earn a total of  38.00  from holding XAI Octagon Floating or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

MainStay CBRE Global  vs.  XAI Octagon Floating

MainStay CBRE Global

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MainStay CBRE Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, MainStay CBRE is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

XAI Octagon Floating

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in XAI Octagon Floating are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, XAI Octagon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MainStay CBRE and XAI Octagon

The main advantage of trading using opposite MainStay CBRE and XAI Octagon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MainStay CBRE position performs unexpectedly, XAI Octagon 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 XAI Octagon will offset losses from the drop in XAI Octagon's long position.

The idea behind MainStay CBRE Global and XAI Octagon Floating 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.