Correlation Between Crossmark Steward and Large Cap

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

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

Diversification Opportunities for Crossmark Steward and Large Cap

-0.52

Correlation Coefficient

Crossmark Steward  Large Cap

Excellent diversification

The 3 months correlation between Crossmark and Large is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Crossmark Steward Equity and Large Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap E and Crossmark Steward 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 Crossmark Steward Equity are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap E has no effect on the direction of Crossmark Steward i.e., Crossmark Steward and Large Cap go up and down completely randomly.

Pair Corralation between Crossmark Steward and Large Cap

Assuming the 90 days horizon Crossmark Steward Equity is expected to generate 0.64 times more return on investment than Large Cap. However, Crossmark Steward Equity is 1.55 times less risky than Large Cap. It trades about 0.04 of its potential returns per unit of risk. Large Cap E is currently generating about -0.06 per unit of risk. If you would invest  2,748  in Crossmark Steward Equity on December 23, 2024 and sell it today you would earn a total of  34.00  from holding Crossmark Steward Equity or generate 1.24% return on investment over 90 days.

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

Crossmark Steward Equity  vs.  Large Cap E

Crossmark Steward Equity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crossmark Steward Equity are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Crossmark Steward is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Large Cap E

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Crossmark Steward and Large Cap

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

The idea behind Crossmark Steward Equity and Large Cap E 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.