Correlation Between Steward Covered and Short Duration

Can any of the company-specific risk be diversified away by investing in both Steward Covered and Short Duration 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 Covered and Short Duration 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 Short Duration Inflation, you can compare the effects of market volatilities on Steward Covered and Short Duration 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 Covered with a short position of Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steward Covered and Short Duration.

Diversification Opportunities for Steward Covered and Short Duration

0.64

Correlation Coefficient

Steward Covered  Short Duration

Poor diversification

The 3 months correlation between Steward and Short is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Steward Ered Call and Short Duration Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Inflation and Steward Covered 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Inflation has no effect on the direction of Steward Covered i.e., Steward Covered and Short Duration go up and down completely randomly.

Pair Corralation between Steward Covered and Short Duration

Assuming the 90 days horizon Steward Ered Call is expected to generate 3.43 times more return on investment than Short Duration. However, Steward Covered is 3.43 times more volatile than Short Duration Inflation. It trades about 0.21 of its potential returns per unit of risk. Short Duration Inflation is currently generating about 0.13 per unit of risk. If you would invest  748.00  in Steward Ered Call on May 3, 2025 and sell it today you would earn a total of  45.00  from holding Steward Ered Call or generate 6.02% return on investment over 90 days.

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

Steward Ered Call  vs.  Short Duration Inflation

Steward Ered Call

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Steward Ered Call are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Steward Covered is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Duration Inflation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Duration Inflation are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short Duration 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 Covered and Short Duration

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

The idea behind Steward Ered Call and Short Duration Inflation 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.