Correlation Between Stagwell and LOEWS

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

By analyzing existing cross correlation between Stagwell and LOEWS P 6, you can compare the effects of market volatilities on Stagwell and LOEWS 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 Stagwell with a short position of LOEWS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and LOEWS.

Diversification Opportunities for Stagwell and LOEWS

-0.18

Correlation Coefficient

Stagwell  LOEWS

Good diversification

The 3 months correlation between Stagwell and LOEWS is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and LOEWS P 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOEWS P 6 and Stagwell 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 Stagwell are associated (or correlated) with LOEWS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOEWS P 6 has no effect on the direction of Stagwell i.e., Stagwell and LOEWS go up and down completely randomly.

Pair Corralation between Stagwell and LOEWS

Given the investment horizon of 90 days Stagwell is expected to under-perform the LOEWS. In addition to that, Stagwell is 3.63 times more volatile than LOEWS P 6. It trades about -0.05 of its total potential returns per unit of risk. LOEWS P 6 is currently generating about 0.01 per unit of volatility. If you would invest  10,609  in LOEWS P 6 on December 24, 2024 and sell it today you would earn a total of  37.00  from holding LOEWS P 6 or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Stagwell  vs.  LOEWS P 6

Stagwell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

LOEWS P 6

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LOEWS P 6 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LOEWS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stagwell and LOEWS

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

The idea behind Stagwell and LOEWS P 6 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.