Correlation Between W R and Stewart Information

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

By analyzing existing cross correlation between W R Berkley and Stewart Information Services, you can compare the effects of market volatilities on W R and Stewart Information 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 W R with a short position of Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of W R and Stewart Information.

Diversification Opportunities for W R and Stewart Information

0.53

Correlation Coefficient

W R  Stewart Information

Very weak diversification

The 3 months correlation between WRB-PE and Stewart is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding W R Berkley and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information and W R 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 W R Berkley are associated (or correlated) with Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of W R i.e., W R and Stewart Information go up and down completely randomly.

Pair Corralation between W R and Stewart Information

Assuming the 90 days trading horizon W R Berkley is expected to under-perform the Stewart Information. But the preferred stock apears to be less risky and, when comparing its historical volatility, W R Berkley is 2.66 times less risky than Stewart Information. The preferred stock trades about -0.17 of its potential returns per unit of risk. The Stewart Information Services is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,805  in Stewart Information Services on February 16, 2025 and sell it today you would lose (201.00) from holding Stewart Information Services or give up 2.95% of portfolio value over 90 days.

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

W R Berkley  vs.  Stewart Information Services

W R Berkley

Risk-Adjusted Performance

Very Weak

Over the last 90 days W R Berkley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Preferred Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Stewart Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stewart Information Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Stewart Information is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with W R and Stewart Information

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

The idea behind W R Berkley and Stewart Information Services 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.