Correlation Between United Guardian and Stephan
Can any of the company-specific risk be diversified away by investing in both United Guardian and Stephan 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 United Guardian and Stephan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and The Stephan Co, you can compare the effects of market volatilities on United Guardian and Stephan 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 United Guardian with a short position of Stephan. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and Stephan.
Diversification Opportunities for United Guardian and Stephan
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Stephan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and The Stephan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Stephan and United Guardian 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 United Guardian are associated (or correlated) with Stephan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Stephan has no effect on the direction of United Guardian i.e., United Guardian and Stephan go up and down completely randomly.
Pair Corralation between United Guardian and Stephan
Allowing for the 90-day total investment horizon United Guardian is expected to generate 3.1 times less return on investment than Stephan. But when comparing it to its historical volatility, United Guardian is 2.23 times less risky than Stephan. It trades about 0.01 of its potential returns per unit of risk. The Stephan Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 169.00 in The Stephan Co on August 24, 2024 and sell it today you would lose (5.00) from holding The Stephan Co or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.64% |
| Values | Daily Returns |
United Guardian vs. The Stephan Co
Performance |
| Timeline |
| United Guardian |
| The Stephan |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
United Guardian and Stephan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Guardian and Stephan
The main advantage of trading using opposite United Guardian and Stephan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian position performs unexpectedly, Stephan 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 Stephan will offset losses from the drop in Stephan's long position.| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Psychemedics | United Guardian vs. Unity Bancorp |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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