Correlation Between Steward International and Steward Global

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

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

Diversification Opportunities for Steward International and Steward Global

0.56

Correlation Coefficient

Steward International  Steward Global

Very weak diversification

The 3 months correlation between Steward and Steward is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Steward International Enhanced and Steward Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Global Equity and Steward International 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 International Enhanced are associated (or correlated) with Steward Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Global Equity has no effect on the direction of Steward International i.e., Steward International and Steward Global go up and down completely randomly.

Pair Corralation between Steward International and Steward Global

Assuming the 90 days horizon Steward International Enhanced is expected to generate 1.14 times more return on investment than Steward Global. However, Steward International is 1.14 times more volatile than Steward Global Equity. It trades about 0.06 of its potential returns per unit of risk. Steward Global Equity is currently generating about 0.07 per unit of risk. If you would invest  2,011  in Steward International Enhanced on September 4, 2024 and sell it today you would earn a total of  573.00  from holding Steward International Enhanced or generate 28.49% return on investment over 90 days.

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

Steward International Enhanced  vs.  Steward Global Equity

Steward International

Risk-Adjusted Performance

3 of 100

Weak

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.

Steward Global Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steward Global Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Steward Global 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 International and Steward Global

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

The idea behind Steward International Enhanced and Steward Global Equity 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.