Correlation Between Steward Small-mid and Steward Large
Can any of the company-specific risk be diversified away by investing in both Steward Small-mid and Steward Large 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 Small-mid and Steward Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steward Small Mid Cap and Steward Large Cap, you can compare the effects of market volatilities on Steward Small-mid and Steward Large 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 Small-mid with a short position of Steward Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steward Small-mid and Steward Large.
Diversification Opportunities for Steward Small-mid and Steward Large
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Steward and Steward is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Steward Small Mid Cap and Steward Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Large Cap and Steward Small-mid 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 Small Mid Cap are associated (or correlated) with Steward Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Large Cap has no effect on the direction of Steward Small-mid i.e., Steward Small-mid and Steward Large go up and down completely randomly.
Pair Corralation between Steward Small-mid and Steward Large
Assuming the 90 days horizon Steward Small Mid Cap is expected to generate 1.59 times more return on investment than Steward Large. However, Steward Small-mid is 1.59 times more volatile than Steward Large Cap. It trades about 0.15 of its potential returns per unit of risk. Steward Large Cap is currently generating about 0.18 per unit of risk. If you would invest 1,321 in Steward Small Mid Cap on August 25, 2024 and sell it today you would earn a total of 96.00 from holding Steward Small Mid Cap or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steward Small Mid Cap vs. Steward Large Cap
Performance |
| Timeline |
| Steward Small Mid |
| Steward Large Cap |
Steward Small-mid and Steward Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steward Small-mid and Steward Large
The main advantage of trading using opposite Steward Small-mid and Steward Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steward Small-mid position performs unexpectedly, Steward Large 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 Large will offset losses from the drop in Steward Large's long position.| Steward Small-mid vs. Steward Large Cap | Steward Small-mid vs. Steward Global E | Steward Small-mid vs. Steward Select Bond | Steward Small-mid vs. Steward Small Mid Cap |
| 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 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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