Correlation Between Stewart Information and Science Applications

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

By analyzing existing cross correlation between Stewart Information Services and Science Applications International, you can compare the effects of market volatilities on Stewart Information and Science Applications 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 Stewart Information with a short position of Science Applications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stewart Information and Science Applications.

Diversification Opportunities for Stewart Information and Science Applications

-0.29

Correlation Coefficient

Stewart Information  Science Applications

Very good diversification

The 3 months correlation between Stewart and Science is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Stewart Information Services and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications and Stewart Information 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 Stewart Information Services are associated (or correlated) with Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of Stewart Information i.e., Stewart Information and Science Applications go up and down completely randomly.

Pair Corralation between Stewart Information and Science Applications

Assuming the 90 days horizon Stewart Information Services is expected to generate 1.14 times more return on investment than Science Applications. However, Stewart Information is 1.14 times more volatile than Science Applications International. It trades about 0.07 of its potential returns per unit of risk. Science Applications International is currently generating about 0.03 per unit of risk. If you would invest  3,634  in Stewart Information Services on August 25, 2024 and sell it today you would earn a total of  3,016  from holding Stewart Information Services or generate 82.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Stewart Information Services  vs.  Science Applications Internati

Stewart Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stewart Information Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Stewart Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Science Applications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Science Applications International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Science Applications is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stewart Information and Science Applications

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

The idea behind Stewart Information Services and Science Applications International 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.