Correlation Between Steward Ered and Steward International

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

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

Diversification Opportunities for Steward Ered and Steward International

-0.21

Correlation Coefficient

Steward Ered  Steward International

Very good diversification

The 3 months correlation between Steward and Steward is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Steward Ered Call and Steward International Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward International and Steward Ered 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 Ered Call 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 Steward Ered i.e., Steward Ered and Steward International go up and down completely randomly.

Pair Corralation between Steward Ered and Steward International

Assuming the 90 days horizon Steward Ered Call is expected to generate 0.55 times more return on investment than Steward International. However, Steward Ered Call is 1.82 times less risky than Steward International. It trades about 0.14 of its potential returns per unit of risk. Steward International Enhanced is currently generating about 0.01 per unit of risk. If you would invest  806.00  in Steward Ered Call on September 14, 2024 and sell it today you would earn a total of  29.00  from holding Steward Ered Call or generate 3.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Steward Ered Call  vs.  Steward International Enhanced

Steward Ered Call

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steward Ered Call are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Steward Ered is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Steward International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steward International Enhanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, 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 Steward Ered and Steward International

The main advantage of trading using opposite Steward Ered and Steward International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steward Ered 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 Steward Ered Call 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.