Correlation Between Steward Covered and Steward Select
Can any of the company-specific risk be diversified away by investing in both Steward Covered and Steward Select 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 Steward Covered and Steward Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steward Ered Call and Steward Select Bond, you can compare the effects of market volatilities on Steward Covered and Steward Select 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 Steward Covered with a short position of Steward Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steward Covered and Steward Select.
Diversification Opportunities for Steward Covered and Steward Select
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steward and Steward is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Steward Ered Call and Steward Select Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Select Bond and Steward Covered 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 Steward Ered Call are associated (or correlated) with Steward Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Select Bond has no effect on the direction of Steward Covered i.e., Steward Covered and Steward Select go up and down completely randomly.
Pair Corralation between Steward Covered and Steward Select
Assuming the 90 days horizon Steward Ered Call is expected to generate 2.28 times more return on investment than Steward Select. However, Steward Covered is 2.28 times more volatile than Steward Select Bond. It trades about 0.08 of its potential returns per unit of risk. Steward Select Bond is currently generating about 0.03 per unit of risk. If you would invest 765.00 in Steward Ered Call on August 25, 2024 and sell it today you would earn a total of 84.00 from holding Steward Ered Call or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steward Ered Call vs. Steward Select Bond
Performance |
| Timeline |
| Steward Ered Call |
| Steward Select Bond |
Steward Covered and Steward Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steward Covered and Steward Select
The main advantage of trading using opposite Steward Covered and Steward Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steward Covered position performs unexpectedly, Steward Select 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 Steward Select will offset losses from the drop in Steward Select's long position.| Steward Covered vs. Steward Small Mid Cap | Steward Covered vs. Steward Small Mid Cap | Steward Covered vs. Steward Select Bond | Steward Covered vs. Steward Select Bond |
| Steward Select vs. Steward Small Mid Cap | Steward Select vs. Steward Small Mid Cap | Steward Select vs. Steward Ered Call | Steward Select vs. Steward Ered Call |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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