Correlation Between Steward Covered and Steward Funds
Can any of the company-specific risk be diversified away by investing in both Steward Covered and Steward Funds 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 Funds 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 Funds , you can compare the effects of market volatilities on Steward Covered and Steward Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steward Covered and Steward Funds.
Diversification Opportunities for Steward Covered and Steward Funds
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Steward and Steward is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Steward Ered Call and Steward Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Funds 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Funds has no effect on the direction of Steward Covered i.e., Steward Covered and Steward Funds go up and down completely randomly.
Pair Corralation between Steward Covered and Steward Funds
Assuming the 90 days horizon Steward Covered is expected to generate 3.46 times less return on investment than Steward Funds. But when comparing it to its historical volatility, Steward Ered Call is 1.16 times less risky than Steward Funds. It trades about 0.03 of its potential returns per unit of risk. Steward Funds is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,126 in Steward Funds on September 3, 2024 and sell it today you would earn a total of 1,075 from holding Steward Funds or generate 50.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steward Ered Call vs. Steward Funds
Performance |
| Timeline |
| Steward Ered Call |
| Steward Funds |
Steward Covered and Steward Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steward Covered and Steward Funds
The main advantage of trading using opposite Steward Covered and Steward Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steward Covered position performs unexpectedly, Steward Funds 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 Funds will offset losses from the drop in Steward Funds' long position.| Steward Covered vs. Franklin Real Estate | Steward Covered vs. Forum Real Estate | Steward Covered vs. Columbia Real Estate | Steward Covered vs. Columbia Real Estate |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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