Correlation Between Steward Large and Steward Small
Can any of the company-specific risk be diversified away by investing in both Steward Large and Steward Small 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 Small 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 Small Mid Cap, you can compare the effects of market volatilities on Steward Large and Steward Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steward Large and Steward Small.
Diversification Opportunities for Steward Large and Steward Small
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Steward and Steward is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Steward Large Cap and Steward Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Small Mid 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Small Mid has no effect on the direction of Steward Large i.e., Steward Large and Steward Small go up and down completely randomly.
Pair Corralation between Steward Large and Steward Small
Assuming the 90 days horizon Steward Large Cap is expected to generate 0.65 times more return on investment than Steward Small. However, Steward Large Cap is 1.54 times less risky than Steward Small. It trades about 0.26 of its potential returns per unit of risk. Steward Small Mid Cap is currently generating about 0.04 per unit of risk. If you would invest 3,049 in Steward Large Cap on September 19, 2024 and sell it today you would earn a total of 101.00 from holding Steward Large Cap or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steward Large Cap vs. Steward Small Mid Cap
Performance |
| Timeline |
| Steward Large Cap |
| Steward Small Mid |
Steward Large and Steward Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steward Large and Steward Small
The main advantage of trading using opposite Steward Large and Steward Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steward Large position performs unexpectedly, Steward Small 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 Small will offset losses from the drop in Steward Small's long position.| Steward Large vs. Steward Small Mid Cap | Steward Large vs. Steward Global E | Steward Large vs. Buffalo Large Cap | Steward Large vs. Steward Select Bond |
| Steward Small vs. Steward Small Mid Cap | Steward Small vs. Steward Small Mid Cap | Steward Small vs. Steward Ered Call | Steward Small 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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