Correlation Between Steward Covered and Stewart Global

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

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

Diversification Opportunities for Steward Covered and Stewart Global

0.66

Correlation Coefficient

Steward Covered  Stewart Global

Poor diversification

The 3 months correlation between Steward and Stewart is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Steward Ered Call and Stewart Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Global Equity and Steward Covered 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 Steward Ered Call are associated (or correlated) with Stewart Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Global Equity has no effect on the direction of Steward Covered i.e., Steward Covered and Stewart Global go up and down completely randomly.

Pair Corralation between Steward Covered and Stewart Global

Assuming the 90 days horizon Steward Covered is expected to generate 10.88 times less return on investment than Stewart Global. But when comparing it to its historical volatility, Steward Ered Call is 1.08 times less risky than Stewart Global. It trades about 0.01 of its potential returns per unit of risk. Stewart Global Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,731  in Stewart Global Equity on December 3, 2024 and sell it today you would earn a total of  700.00  from holding Stewart Global Equity or generate 25.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.7%
Values	Daily Returns

Steward Ered Call  vs.  Stewart Global Equity

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 basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Stewart Global Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stewart Global Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Stewart Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Steward Covered and Stewart Global

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

The idea behind Steward Ered Call and Stewart Global Equity 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.