Correlation Between Steward Large and Steward Select
Can any of the company-specific risk be diversified away by investing in both Steward Large 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 Large 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 Large Cap and Steward Select Bond, you can compare the effects of market volatilities on Steward Large 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 Large with a short position of Steward Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steward Large and Steward Select.
Diversification Opportunities for Steward Large and Steward Select
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steward and Steward is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Steward Large Cap 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 Large 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 Large Cap 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 Large i.e., Steward Large and Steward Select go up and down completely randomly.
Pair Corralation between Steward Large and Steward Select
Assuming the 90 days horizon Steward Large Cap is expected to generate 2.98 times more return on investment than Steward Select. However, Steward Large is 2.98 times more volatile than Steward Select Bond. It trades about 0.14 of its potential returns per unit of risk. Steward Select Bond is currently generating about -0.25 per unit of risk. If you would invest 2,903 in Steward Large Cap on August 25, 2024 and sell it today you would earn a total of 123.00 from holding Steward Large Cap or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steward Large Cap vs. Steward Select Bond
Performance |
| Timeline |
| Steward Large Cap |
| Steward Select Bond |
Steward Large and Steward Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steward Large and Steward Select
The main advantage of trading using opposite Steward Large and Steward Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steward Large 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 Large vs. Steward Small Mid Cap | Steward Large vs. Steward Small Mid Cap | Steward Large vs. Steward Ered Call | Steward Large vs. Steward Ered Call |
| Steward Select vs. Steward Large Cap | Steward Select vs. Steward Small Mid Cap | Steward Select vs. Steward Select Bond | Steward Select vs. Steward International Enhanced |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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