Correlation Between William Blair and Steward Small-mid

Can any of the company-specific risk be diversified away by investing in both William Blair 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 William Blair 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 William Blair Large and Steward Small Mid Cap, you can compare the effects of market volatilities on William Blair 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 William Blair with a short position of Steward Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Blair and Steward Small-mid.

Diversification Opportunities for William Blair and Steward Small-mid

0.96

Correlation Coefficient

William Blair  Steward Small-mid

Almost no diversification

The 3 months correlation between William and Steward is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Large 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 William Blair 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 William Blair Large 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 William Blair i.e., William Blair and Steward Small-mid go up and down completely randomly.

Pair Corralation between William Blair and Steward Small-mid

Assuming the 90 days horizon William Blair Large is expected to under-perform the Steward Small-mid. In addition to that, William Blair is 1.25 times more volatile than Steward Small Mid Cap. It trades about -0.13 of its total potential returns per unit of risk. Steward Small Mid Cap is currently generating about -0.12 per unit of volatility. If you would invest  1,281  in Steward Small Mid Cap on December 29, 2024 and sell it today you would lose (100.00) from holding Steward Small Mid Cap or give up 7.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

William Blair Large  vs.  Steward Small Mid Cap

William Blair Large

Risk-Adjusted Performance

Very Weak

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

Steward Small Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steward Small Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 William Blair and Steward Small-mid

The main advantage of trading using opposite William Blair and Steward Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair 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.

The idea behind William Blair Large and Steward Small Mid Cap 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.