Correlation Between Stewart Information and TT Electronics
Can any of the company-specific risk be diversified away by investing in both Stewart Information and TT Electronics 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 Stewart Information and TT Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stewart Information Services and TT Electronics PLC, you can compare the effects of market volatilities on Stewart Information and TT Electronics 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 Stewart Information with a short position of TT Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stewart Information and TT Electronics.
Diversification Opportunities for Stewart Information and TT Electronics
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stewart and 7TT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Stewart Information Services and TT Electronics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TT Electronics PLC and Stewart Information 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 Stewart Information Services are associated (or correlated) with TT Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TT Electronics PLC has no effect on the direction of Stewart Information i.e., Stewart Information and TT Electronics go up and down completely randomly.
Pair Corralation between Stewart Information and TT Electronics
Assuming the 90 days horizon Stewart Information Services is expected to generate 1.22 times more return on investment than TT Electronics. However, Stewart Information is 1.22 times more volatile than TT Electronics PLC. It trades about -0.02 of its potential returns per unit of risk. TT Electronics PLC is currently generating about -0.35 per unit of risk. If you would invest 6,250 in Stewart Information Services on November 5, 2024 and sell it today you would lose (100.00) from holding Stewart Information Services or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stewart Information Services vs. TT Electronics PLC
Performance |
| Timeline |
| Stewart Information |
| TT Electronics PLC |
Stewart Information and TT Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stewart Information and TT Electronics
The main advantage of trading using opposite Stewart Information and TT Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stewart Information position performs unexpectedly, TT Electronics 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 TT Electronics will offset losses from the drop in TT Electronics' long position.| Stewart Information vs. CullenFrost Bankers | Stewart Information vs. Synovus Financial Corp | Stewart Information vs. OAKTRSPECLENDNEW | Stewart Information vs. FIREWEED METALS P |
| TT Electronics vs. Delta Electronics Public | TT Electronics vs. Nomad Foods | TT Electronics vs. Suntory Beverage Food | TT Electronics vs. LIFEWAY FOODS |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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