Correlation Between City National and Steward International

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

By analyzing existing cross correlation between City National Rochdale and Steward International Enhanced, you can compare the effects of market volatilities on City National and Steward International 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 City National with a short position of Steward International. Check out your portfolio center. Please also check ongoing floating volatility patterns of City National and Steward International.

Diversification Opportunities for City National and Steward International

0.07

Correlation Coefficient

City National  Steward International

Significant diversification

The 3 months correlation between City and Steward is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Steward International Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward International and City National 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 City National Rochdale are associated (or correlated) with Steward International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward International has no effect on the direction of City National i.e., City National and Steward International go up and down completely randomly.

Pair Corralation between City National and Steward International

Assuming the 90 days horizon City National is expected to generate 1.62 times less return on investment than Steward International. But when comparing it to its historical volatility, City National Rochdale is 9.76 times less risky than Steward International. It trades about 0.24 of its potential returns per unit of risk. Steward International Enhanced is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,543  in Steward International Enhanced on September 12, 2024 and sell it today you would earn a total of  46.00  from holding Steward International Enhanced or generate 1.81% return on investment over 90 days.

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

City National Rochdale  vs.  Steward International Enhanced

City National Rochdale

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in City National Rochdale are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, City National is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Steward International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Steward International Enhanced are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Steward International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with City National and Steward International

The main advantage of trading using opposite City National and Steward International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City National position performs unexpectedly, Steward International 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 International will offset losses from the drop in Steward International's long position.

The idea behind City National Rochdale and Steward International Enhanced 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.