Correlation Between PWUPW Old and Stifel Financial

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

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

Diversification Opportunities for PWUPW Old and Stifel Financial

-0.61

Correlation Coefficient

PWUPW Old  Stifel Financial

Excellent diversification

The 3 months correlation between PWUPW and Stifel is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PWUPW Old and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial and PWUPW Old 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 PWUPW Old 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 has no effect on the direction of PWUPW Old i.e., PWUPW Old and Stifel Financial go up and down completely randomly.

Pair Corralation between PWUPW Old and Stifel Financial

Assuming the 90 days horizon PWUPW Old is expected to generate 10.87 times more return on investment than Stifel Financial. However, PWUPW Old is 10.87 times more volatile than Stifel Financial. It trades about 0.17 of its potential returns per unit of risk. Stifel Financial is currently generating about -0.09 per unit of risk. If you would invest  3.70  in PWUPW Old on December 28, 2024 and sell it today you would earn a total of  2.85  from holding PWUPW Old or generate 77.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	54.1%
Values	Daily Returns

PWUPW Old  vs.  Stifel Financial

PWUPW Old

Risk-Adjusted Performance

Good

Over the last 90 days PWUPW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, PWUPW Old showed solid returns over the last few months and may actually be approaching a breakup point.

Stifel Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stifel Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PWUPW Old and Stifel Financial

The main advantage of trading using opposite PWUPW Old and Stifel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PWUPW Old 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 PWUPW Old and Stifel Financial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.