Correlation Between Old Republic and Stewart Information

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

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

Diversification Opportunities for Old Republic and Stewart Information

0.1

Correlation Coefficient

Old Republic  Stewart Information

Average diversification

The 3 months correlation between Old and Stewart is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information and Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Stewart Information go up and down completely randomly.

Pair Corralation between Old Republic and Stewart Information

Considering the 90-day investment horizon Old Republic is expected to generate 1.01 times less return on investment than Stewart Information. But when comparing it to its historical volatility, Old Republic International is 1.3 times less risky than Stewart Information. It trades about 0.24 of its potential returns per unit of risk. Stewart Information Services is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6,002  in Stewart Information Services on December 11, 2024 and sell it today you would earn a total of  736.00  from holding Stewart Information Services or generate 12.26% return on investment over 90 days.

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

Old Republic International  vs.  Stewart Information Services

Old Republic Interna

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Old Republic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Old Republic and Stewart Information

The main advantage of trading using opposite Old Republic and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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 Old Republic International 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.