Correlation Between 90331HPL1 and Main Street

Can any of the company-specific risk be diversified away by investing in both 90331HPL1 and Main Street 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 90331HPL1 and Main Street into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US BANK NATIONAL and Main Street Capital, you can compare the effects of market volatilities on 90331HPL1 and Main Street 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 90331HPL1 with a short position of Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of 90331HPL1 and Main Street.

Diversification Opportunities for 90331HPL1 and Main Street

-0.34

Correlation Coefficient

90331HPL1  Main Street

Very good diversification

The 3 months correlation between 90331HPL1 and Main is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding US BANK NATIONAL and Main Street Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Capital and 90331HPL1 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 US BANK NATIONAL are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Capital has no effect on the direction of 90331HPL1 i.e., 90331HPL1 and Main Street go up and down completely randomly.

Pair Corralation between 90331HPL1 and Main Street

Assuming the 90 days trading horizon US BANK NATIONAL is expected to under-perform the Main Street. In addition to that, 90331HPL1 is 1.18 times more volatile than Main Street Capital. It trades about -0.11 of its total potential returns per unit of risk. Main Street Capital is currently generating about 0.3 per unit of volatility. If you would invest  4,857  in Main Street Capital on August 31, 2024 and sell it today you would earn a total of  690.00  from holding Main Street Capital or generate 14.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.38%
Values	Daily Returns

US BANK NATIONAL  vs.  Main Street Capital

US BANK NATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US BANK NATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 90331HPL1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Main Street Capital

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Main Street displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 90331HPL1 and Main Street

The main advantage of trading using opposite 90331HPL1 and Main Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 90331HPL1 position performs unexpectedly, Main Street 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 Main Street will offset losses from the drop in Main Street's long position.

The idea behind US BANK NATIONAL and Main Street Capital 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.