Correlation Between Stewart Information and Hollywood Bowl

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

By analyzing existing cross correlation between Stewart Information Services and Hollywood Bowl Group, you can compare the effects of market volatilities on Stewart Information and Hollywood Bowl 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 Stewart Information with a short position of Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stewart Information and Hollywood Bowl.

Diversification Opportunities for Stewart Information and Hollywood Bowl

0.67

Correlation Coefficient

Stewart Information  Hollywood Bowl

Poor diversification

The 3 months correlation between Stewart and Hollywood is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Stewart Information Services and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group and Stewart Information 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 Stewart Information Services are associated (or correlated) with Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Stewart Information i.e., Stewart Information and Hollywood Bowl go up and down completely randomly.

Pair Corralation between Stewart Information and Hollywood Bowl

Assuming the 90 days horizon Stewart Information Services is expected to generate 1.04 times more return on investment than Hollywood Bowl. However, Stewart Information is 1.04 times more volatile than Hollywood Bowl Group. It trades about 0.05 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.02 per unit of risk. If you would invest  3,981  in Stewart Information Services on October 21, 2024 and sell it today you would earn a total of  2,169  from holding Stewart Information Services or generate 54.48% return on investment over 90 days.

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

Stewart Information Services  vs.  Hollywood Bowl Group

Stewart Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stewart Information Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hollywood Bowl Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollywood Bowl Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Stewart Information and Hollywood Bowl

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

The idea behind Stewart Information Services and Hollywood Bowl 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 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.