Correlation Between XAI Octagon and MainStay CBRE

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

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

Diversification Opportunities for XAI Octagon and MainStay CBRE

-0.57

Correlation Coefficient

XAI Octagon  MainStay CBRE

Excellent diversification

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

Pair Corralation between XAI Octagon and MainStay CBRE

Given the investment horizon of 90 days XAI Octagon Floating is expected to generate 0.74 times more return on investment than MainStay CBRE. However, XAI Octagon Floating is 1.35 times less risky than MainStay CBRE. It trades about 0.1 of its potential returns per unit of risk. MainStay CBRE Global is currently generating about 0.04 per unit of risk. If you would invest  530.00  in XAI Octagon Floating on August 31, 2024 and sell it today you would earn a total of  175.00  from holding XAI Octagon Floating or generate 33.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

XAI Octagon Floating  vs.  MainStay CBRE Global

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.

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.

Pair Trading with XAI Octagon and MainStay CBRE

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

The idea behind XAI Octagon Floating and MainStay CBRE 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.