Correlation Between Stellus Capital and US Global

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

By analyzing existing cross correlation between Stellus Capital Investment and US Global Investors, you can compare the effects of market volatilities on Stellus Capital and US 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 Stellus Capital with a short position of US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellus Capital and US Global.

Diversification Opportunities for Stellus Capital and US Global

-0.81

Correlation Coefficient

Stellus Capital  US Global

Pay attention - limited upside

The 3 months correlation between Stellus and GROW is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Stellus Capital Investment and US Global Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Investors and Stellus Capital 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 Stellus Capital Investment are associated (or correlated) with US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Investors has no effect on the direction of Stellus Capital i.e., Stellus Capital and US Global go up and down completely randomly.

Pair Corralation between Stellus Capital and US Global

Considering the 90-day investment horizon Stellus Capital Investment is expected to under-perform the US Global. But the stock apears to be less risky and, when comparing its historical volatility, Stellus Capital Investment is 1.69 times less risky than US Global. The stock trades about -0.13 of its potential returns per unit of risk. The US Global Investors is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  245.00  in US Global Investors on August 27, 2024 and sell it today you would earn a total of  4.00  from holding US Global Investors or generate 1.63% return on investment over 90 days.

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

Stellus Capital Investment  vs.  US Global Investors

Stellus Capital Inve

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stellus Capital Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Stellus Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

US Global Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Global Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, US Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Stellus Capital and US Global

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

The idea behind Stellus Capital Investment and US Global Investors 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.