Correlation Between Stifel Financial and Redwood Trust
Can any of the company-specific risk be diversified away by investing in both Stifel Financial and Redwood Trust 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 Stifel Financial and Redwood Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stifel Financial and Redwood Trust, you can compare the effects of market volatilities on Stifel Financial and Redwood Trust 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 Stifel Financial with a short position of Redwood Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stifel Financial and Redwood Trust.
Diversification Opportunities for Stifel Financial and Redwood Trust
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stifel and Redwood is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial and Redwood Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Trust and Stifel Financial 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 Stifel Financial are associated (or correlated) with Redwood Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Trust has no effect on the direction of Stifel Financial i.e., Stifel Financial and Redwood Trust go up and down completely randomly.
Pair Corralation between Stifel Financial and Redwood Trust
Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 2.95 times more return on investment than Redwood Trust. However, Stifel Financial is 2.95 times more volatile than Redwood Trust. It trades about 0.18 of its potential returns per unit of risk. Redwood Trust is currently generating about -0.06 per unit of risk. If you would invest 10,327 in Stifel Financial on September 2, 2024 and sell it today you would earn a total of 1,253 from holding Stifel Financial or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stifel Financial vs. Redwood Trust
Performance |
| Timeline |
| Stifel Financial |
| Redwood Trust |
Stifel Financial and Redwood Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stifel Financial and Redwood Trust
The main advantage of trading using opposite Stifel Financial and Redwood Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial position performs unexpectedly, Redwood Trust 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 Redwood Trust will offset losses from the drop in Redwood Trust's long position.| Stifel Financial vs. Raymond James Financial | Stifel Financial vs. Evercore Partners | Stifel Financial vs. Selective Insurance Group | Stifel Financial vs. Reinsurance Group of |
| Redwood Trust vs. Two Harbors Investments | Redwood Trust vs. AG Mortgage Investment | Redwood Trust vs. Invesco Mortgage Capital | Redwood Trust vs. MFA Financial |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |