Correlation Between Stellar and US Global

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

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

Diversification Opportunities for Stellar and US Global

-0.49

Correlation Coefficient

Stellar  US Global

Very good diversification

The 3 months correlation between Stellar and SEA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and US Global Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Sea and Stellar 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 Stellar 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 Sea has no effect on the direction of Stellar i.e., Stellar and US Global go up and down completely randomly.

Pair Corralation between Stellar and US Global

Assuming the 90 days trading horizon Stellar is expected to under-perform the US Global. In addition to that, Stellar is 3.87 times more volatile than US Global Sea. It trades about -0.2 of its total potential returns per unit of risk. US Global Sea is currently generating about 0.24 per unit of volatility. If you would invest  1,506  in US Global Sea on January 30, 2024 and sell it today you would earn a total of  73.00  from holding US Global Sea or generate 4.85% return on investment over 90 days.

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

Stellar  vs.  US Global Sea

Stellar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar may actually be approaching a critical reversion point that can send shares even higher in May 2024.

US Global Sea

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Sea are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, US 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 Stellar and US Global

The main advantage of trading using opposite Stellar and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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 Stellar and US Global Sea 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.