Correlation Between White Mountains and Stewart Information

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

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

Diversification Opportunities for White Mountains and Stewart Information

0.71

Correlation Coefficient

White Mountains  Stewart Information

Poor diversification

The 3 months correlation between White and Stewart is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding White Mountains Insurance and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information and White Mountains 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 White Mountains Insurance 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 White Mountains i.e., White Mountains and Stewart Information go up and down completely randomly.

Pair Corralation between White Mountains and Stewart Information

Considering the 90-day investment horizon White Mountains Insurance is expected to generate 0.71 times more return on investment than Stewart Information. However, White Mountains Insurance is 1.41 times less risky than Stewart Information. It trades about 0.09 of its potential returns per unit of risk. Stewart Information Services is currently generating about -0.22 per unit of risk. If you would invest  174,693  in White Mountains Insurance on March 2, 2025 and sell it today you would earn a total of  3,787  from holding White Mountains Insurance or generate 2.17% return on investment over 90 days.

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

White Mountains Insurance  vs.  Stewart Information Services

White Mountains Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days White Mountains Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, White Mountains is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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 inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with White Mountains and Stewart Information

The main advantage of trading using opposite White Mountains and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Mountains 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 White Mountains Insurance 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.