Correlation Between Steward Small and Stewart Global

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

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

Diversification Opportunities for Steward Small and Stewart Global

0.73

Correlation Coefficient

Steward Small  Stewart Global

Poor diversification

The 3 months correlation between Steward and Stewart is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Steward Small Mid Cap and Stewart Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Global Equity and Steward Small 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 Small Mid Cap are associated (or correlated) with Stewart Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Global Equity has no effect on the direction of Steward Small i.e., Steward Small and Stewart Global go up and down completely randomly.

Pair Corralation between Steward Small and Stewart Global

Assuming the 90 days horizon Steward Small is expected to generate 1.09 times less return on investment than Stewart Global. In addition to that, Steward Small is 1.38 times more volatile than Stewart Global Equity. It trades about 0.06 of its total potential returns per unit of risk. Stewart Global Equity is currently generating about 0.08 per unit of volatility. If you would invest  2,540  in Stewart Global Equity on July 12, 2024 and sell it today you would earn a total of  985.00  from holding Stewart Global Equity or generate 38.78% return on investment over 90 days.

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

Steward Small Mid Cap  vs.  Stewart Global Equity

Steward Small Mid

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Steward Small Mid Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Steward Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stewart Global Equity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stewart Global Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Stewart 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 Small and Stewart Global

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

The idea behind Steward Small Mid Cap and Stewart 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.