Correlation Between Lind Capital and Steward Large

Can any of the company-specific risk be diversified away by investing in both Lind Capital 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 Lind Capital and Steward Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lind Capital Partners and Steward Large Cap, you can compare the effects of market volatilities on Lind Capital 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 Lind Capital with a short position of Steward Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lind Capital and Steward Large.

Diversification Opportunities for Lind Capital and Steward Large

0.43

Correlation Coefficient

Lind Capital  Steward Large

Very weak diversification

The 3 months correlation between Lind and Steward is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lind Capital Partners 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 Lind Capital 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 Lind Capital Partners 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 Lind Capital i.e., Lind Capital and Steward Large go up and down completely randomly.

Pair Corralation between Lind Capital and Steward Large

Assuming the 90 days horizon Lind Capital is expected to generate 5.02 times less return on investment than Steward Large. But when comparing it to its historical volatility, Lind Capital Partners is 2.8 times less risky than Steward Large. It trades about 0.11 of its potential returns per unit of risk. Steward Large Cap is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,796  in Steward Large Cap on September 3, 2024 and sell it today you would earn a total of  261.00  from holding Steward Large Cap or generate 9.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Lind Capital Partners  vs.  Steward Large Cap

Lind Capital Partners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lind Capital Partners are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Lind Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Steward Large Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Steward Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Steward Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lind Capital and Steward Large

The main advantage of trading using opposite Lind Capital and Steward Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lind Capital 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.

The idea behind Lind Capital Partners and Steward Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.