Correlation Between Heritage Global and Stifel Financial

Can any of the company-specific risk be diversified away by investing in both Heritage Global and Stifel Financial 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 Heritage Global and Stifel Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heritage Global and Stifel Financial Corp, you can compare the effects of market volatilities on Heritage Global and Stifel Financial 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 Heritage Global with a short position of Stifel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Global and Stifel Financial.

Diversification Opportunities for Heritage Global and Stifel Financial

0.3

Correlation Coefficient

Heritage Global  Stifel Financial

Weak diversification

The 3 months correlation between Heritage and Stifel is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Global and Stifel Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial Corp and Heritage Global 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 Heritage Global are associated (or correlated) with Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial Corp has no effect on the direction of Heritage Global i.e., Heritage Global and Stifel Financial go up and down completely randomly.

Pair Corralation between Heritage Global and Stifel Financial

Given the investment horizon of 90 days Heritage Global is expected to generate 5.05 times more return on investment than Stifel Financial. However, Heritage Global is 5.05 times more volatile than Stifel Financial Corp. It trades about 0.15 of its potential returns per unit of risk. Stifel Financial Corp is currently generating about 0.04 per unit of risk. If you would invest  175.00  in Heritage Global on December 29, 2024 and sell it today you would earn a total of  50.00  from holding Heritage Global or generate 28.57% return on investment over 90 days.

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

Heritage Global  vs.  Stifel Financial Corp

Heritage Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heritage Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Heritage Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

Stifel Financial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Stifel Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Heritage Global and Stifel Financial

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

The idea behind Heritage Global and Stifel Financial Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.