Correlation Between Stifel Financial and Stonex

Can any of the company-specific risk be diversified away by investing in both Stifel Financial and Stonex 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 Stonex 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 Stonex Group, you can compare the effects of market volatilities on Stifel Financial and Stonex 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 Stonex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stifel Financial and Stonex.

Diversification Opportunities for Stifel Financial and Stonex

0.63

Correlation Coefficient

Stifel Financial  Stonex

Poor diversification

The 3 months correlation between Stifel and Stonex is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial Corp and Stonex Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stonex Group 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 Stonex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stonex Group has no effect on the direction of Stifel Financial i.e., Stifel Financial and Stonex go up and down completely randomly.

Pair Corralation between Stifel Financial and Stonex

Assuming the 90 days horizon Stifel Financial is expected to generate 37.16 times less return on investment than Stonex. But when comparing it to its historical volatility, Stifel Financial Corp is 3.04 times less risky than Stonex. It trades about 0.01 of its potential returns per unit of risk. Stonex Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  10,476  in Stonex Group on December 1, 2024 and sell it today you would earn a total of  1,591  from holding Stonex Group or generate 15.19% return on investment over 90 days.

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

Stifel Financial Corp  vs.  Stonex Group

Stifel Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stifel Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Stonex Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stonex Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Stonex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stifel Financial and Stonex

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

The idea behind Stifel Financial Corp and Stonex Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.