Correlation Between Steward Large and Steward Small-mid
Can any of the company-specific risk be diversified away by investing in both Steward Large and Steward Small-mid 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 Large and Steward Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steward Large Cap and Steward Small Mid Cap, you can compare the effects of market volatilities on Steward Large and Steward Small-mid 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 Large with a short position of Steward Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steward Large and Steward Small-mid.
Diversification Opportunities for Steward Large and Steward Small-mid
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steward and Steward is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Steward Large Cap and Steward Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Small Mid and Steward Large 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 Large Cap are associated (or correlated) with Steward Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Small Mid has no effect on the direction of Steward Large i.e., Steward Large and Steward Small-mid go up and down completely randomly.
Pair Corralation between Steward Large and Steward Small-mid
Assuming the 90 days horizon Steward Large is expected to generate 1.05 times less return on investment than Steward Small-mid. But when comparing it to its historical volatility, Steward Large Cap is 1.12 times less risky than Steward Small-mid. It trades about 0.05 of its potential returns per unit of risk. Steward Small Mid Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,266 in Steward Small Mid Cap on July 11, 2024 and sell it today you would earn a total of 42.00 from holding Steward Small Mid Cap or generate 3.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Steward Large Cap vs. Steward Small Mid Cap
Performance |
Timeline |
Steward Large Cap |
Steward Small Mid |
Steward Large and Steward Small-mid Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steward Large and Steward Small-mid
The main advantage of trading using opposite Steward Large and Steward Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steward Large position performs unexpectedly, Steward Small-mid 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 Small-mid will offset losses from the drop in Steward Small-mid's long position.Steward Large vs. Commonwealth Global Fund | Steward Large vs. Legg Mason Global | Steward Large vs. Auer Growth Fund | Steward Large vs. Old Westbury Large |
Steward Small-mid vs. Steward Large Cap | Steward Small-mid vs. Steward Global E | Steward Small-mid vs. Steward Select Bond | Steward Small-mid vs. Steward Small Mid Cap |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing |