Correlation Between Stifel Financial and WT Offshore

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

Diversification Opportunities for Stifel Financial and WT Offshore

0.36

Correlation Coefficient

Stifel Financial  WT Offshore

Weak diversification

The 3 months correlation between Stifel and WTI is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial Corp and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore 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 WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of Stifel Financial i.e., Stifel Financial and WT Offshore go up and down completely randomly.

Pair Corralation between Stifel Financial and WT Offshore

Assuming the 90 days horizon Stifel Financial is expected to generate 19.38 times less return on investment than WT Offshore. But when comparing it to its historical volatility, Stifel Financial Corp is 4.34 times less risky than WT Offshore. It trades about 0.01 of its potential returns per unit of risk. WT Offshore is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  160.00  in WT Offshore on December 27, 2024 and sell it today you would earn a total of  4.00  from holding WT Offshore or generate 2.5% 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.  WT Offshore

Stifel Financial Corp

Risk-Adjusted Performance

Weak

Over the last 90 days Stifel Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Stifel Financial is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

WT Offshore

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WT Offshore are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, WT Offshore is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Stifel Financial and WT Offshore

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

The idea behind Stifel Financial Corp and WT Offshore 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.