Correlation Between Steward Small and Steward Global

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

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

Diversification Opportunities for Steward Small and Steward Global

0.56

Correlation Coefficient

Steward Small  Steward Global

Very weak diversification

The 3 months correlation between Steward and Steward is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Steward Small Mid Cap and Steward Global E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Global E and Steward Small 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 Small Mid Cap are associated (or correlated) with Steward Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Global E has no effect on the direction of Steward Small i.e., Steward Small and Steward Global go up and down completely randomly.

Pair Corralation between Steward Small and Steward Global

Assuming the 90 days horizon Steward Small Mid Cap is expected to under-perform the Steward Global. In addition to that, Steward Small is 1.44 times more volatile than Steward Global E. It trades about -0.28 of its total potential returns per unit of risk. Steward Global E is currently generating about 0.13 per unit of volatility. If you would invest  3,405  in Steward Global E on December 2, 2024 and sell it today you would earn a total of  57.00  from holding Steward Global E or generate 1.67% return on investment over 90 days.

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

Steward Small Mid Cap  vs.  Steward Global E

Steward Small Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steward Small Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Steward Global E

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steward Global E has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Steward Small and Steward Global

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

The idea behind Steward Small Mid Cap and Steward Global 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.