Correlation Between Lebenthal Lisanti and Steward Covered

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

By analyzing existing cross correlation between Lebenthal Lisanti Small and Steward Ered Call, you can compare the effects of market volatilities on Lebenthal Lisanti and Steward Covered 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 Lebenthal Lisanti with a short position of Steward Covered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lebenthal Lisanti and Steward Covered.

Diversification Opportunities for Lebenthal Lisanti and Steward Covered

0.59

Correlation Coefficient

Lebenthal Lisanti  Steward Covered

Very weak diversification

The 3 months correlation between Lebenthal and Steward is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lebenthal Lisanti Small and Steward Ered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Ered Call and Lebenthal Lisanti 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 Lebenthal Lisanti Small are associated (or correlated) with Steward Covered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Ered Call has no effect on the direction of Lebenthal Lisanti i.e., Lebenthal Lisanti and Steward Covered go up and down completely randomly.

Pair Corralation between Lebenthal Lisanti and Steward Covered

Assuming the 90 days horizon Lebenthal Lisanti Small is expected to under-perform the Steward Covered. In addition to that, Lebenthal Lisanti is 1.61 times more volatile than Steward Ered Call. It trades about -0.18 of its total potential returns per unit of risk. Steward Ered Call is currently generating about -0.13 per unit of volatility. If you would invest  853.00  in Steward Ered Call on December 3, 2024 and sell it today you would lose (63.00) from holding Steward Ered Call or give up 7.39% of portfolio value over 90 days.

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

Lebenthal Lisanti Small  vs.  Steward Ered Call

Lebenthal Lisanti Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lebenthal Lisanti Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Steward Ered Call

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steward Ered Call has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Lebenthal Lisanti and Steward Covered

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

The idea behind Lebenthal Lisanti Small and Steward Ered Call 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.