Correlation Between Steward Global and Buffalo Large

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

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

Diversification Opportunities for Steward Global and Buffalo Large

0.15

Correlation Coefficient

Steward Global  Buffalo Large

Average diversification

The 3 months correlation between Steward and Buffalo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Steward Global E and Buffalo Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo Large Cap and Steward Global 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 Global E are associated (or correlated) with Buffalo Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo Large Cap has no effect on the direction of Steward Global i.e., Steward Global and Buffalo Large go up and down completely randomly.

Pair Corralation between Steward Global and Buffalo Large

Assuming the 90 days horizon Steward Global E is expected to generate 0.66 times more return on investment than Buffalo Large. However, Steward Global E is 1.52 times less risky than Buffalo Large. It trades about 0.07 of its potential returns per unit of risk. Buffalo Large Cap is currently generating about -0.06 per unit of risk. If you would invest  3,300  in Steward Global E on December 27, 2024 and sell it today you would earn a total of  114.00  from holding Steward Global E or generate 3.45% return on investment over 90 days.

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

Steward Global E  vs.  Buffalo Large Cap

Steward Global E

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Steward Global E are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Steward Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Buffalo Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Buffalo Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Buffalo Large 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 Global and Buffalo Large

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

The idea behind Steward Global E and Buffalo Large Cap 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.