Correlation Between T Rowe and Stifel Financial

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

By analyzing existing cross correlation between T Rowe Price and Stifel Financial, you can compare the effects of market volatilities on T Rowe and Stifel Financial 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 T Rowe with a short position of Stifel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Stifel Financial.

Diversification Opportunities for T Rowe and Stifel Financial

0.51

Correlation Coefficient

T Rowe  Stifel Financial

Very weak diversification

The 3 months correlation between TROW and Stifel is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial and T Rowe 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 T Rowe Price are associated (or correlated) with Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of T Rowe i.e., T Rowe and Stifel Financial go up and down completely randomly.

Pair Corralation between T Rowe and Stifel Financial

Given the investment horizon of 90 days T Rowe is expected to generate 4.3 times less return on investment than Stifel Financial. In addition to that, T Rowe is 1.16 times more volatile than Stifel Financial. It trades about 0.01 of its total potential returns per unit of risk. Stifel Financial is currently generating about 0.03 per unit of volatility. If you would invest  6,186  in Stifel Financial on January 25, 2024 and sell it today you would earn a total of  1,602  from holding Stifel Financial or generate 25.9% return on investment over 90 days.

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

T Rowe Price  vs.  Stifel Financial

T Rowe Price

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, T Rowe is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Stifel Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Stifel Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with T Rowe and Stifel Financial

The main advantage of trading using opposite T Rowe and Stifel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Stifel Financial 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 Stifel Financial will offset losses from the drop in Stifel Financial's long position.

The idea behind T Rowe Price and Stifel Financial 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.