Correlation Between Steward Funds and Steward Large

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

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

Diversification Opportunities for Steward Funds and Steward Large

0.92

Correlation Coefficient

Steward Funds  Steward Large

Almost no diversification

The 3 months correlation between Steward and Steward is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Steward Funds and Steward Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Large Cap and Steward Funds 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 Funds are associated (or correlated) with Steward Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Large Cap has no effect on the direction of Steward Funds i.e., Steward Funds and Steward Large go up and down completely randomly.

Pair Corralation between Steward Funds and Steward Large

Assuming the 90 days horizon Steward Funds is expected to under-perform the Steward Large. In addition to that, Steward Funds is 1.03 times more volatile than Steward Large Cap. It trades about -0.08 of its total potential returns per unit of risk. Steward Large Cap is currently generating about -0.07 per unit of volatility. If you would invest  3,495  in Steward Large Cap on December 27, 2024 and sell it today you would lose (151.00) from holding Steward Large Cap or give up 4.32% of portfolio value over 90 days.

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

Steward Funds   vs.  Steward Large Cap

Steward Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steward Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Steward Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Steward Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steward Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Steward 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 Funds and Steward Large

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

The idea behind Steward Funds and Steward 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.