Correlation Between Stifel Financial and PJT Partners

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

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

Diversification Opportunities for Stifel Financial and PJT Partners

0.32

Correlation Coefficient

Stifel Financial  PJT Partners

Weak diversification

The 3 months correlation between Stifel and PJT is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial Corp and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners and Stifel Financial 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 Stifel Financial Corp are associated (or correlated) with PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of Stifel Financial i.e., Stifel Financial and PJT Partners go up and down completely randomly.

Pair Corralation between Stifel Financial and PJT Partners

Assuming the 90 days horizon Stifel Financial is expected to generate 8.38 times less return on investment than PJT Partners. But when comparing it to its historical volatility, Stifel Financial Corp is 4.1 times less risky than PJT Partners. It trades about 0.09 of its potential returns per unit of risk. PJT Partners is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  10,643  in PJT Partners on September 3, 2024 and sell it today you would earn a total of  6,093  from holding PJT Partners or generate 57.25% return on investment over 90 days.

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

Stifel Financial Corp  vs.  PJT Partners

Stifel Financial Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial Corp are ranked lower than 8 (%) 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.

PJT Partners

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PJT Partners are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward-looking indicators, PJT Partners unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stifel Financial and PJT Partners

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

The idea behind Stifel Financial Corp and PJT Partners 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.