Correlation Between Allient and Stepstone
Can any of the company-specific risk be diversified away by investing in both Allient and Stepstone 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 Allient and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allient and Stepstone Group, you can compare the effects of market volatilities on Allient and Stepstone 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 Allient with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and Stepstone.
Diversification Opportunities for Allient and Stepstone
Very weak diversification
The 3 months correlation between Allient and Stepstone is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Allient 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 Allient are associated (or correlated) with Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Allient i.e., Allient and Stepstone go up and down completely randomly.
Pair Corralation between Allient and Stepstone
Given the investment horizon of 90 days Allient is expected to generate 11.99 times less return on investment than Stepstone. In addition to that, Allient is 1.37 times more volatile than Stepstone Group. It trades about 0.01 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.18 per unit of volatility. If you would invest 2,562 in Stepstone Group on September 4, 2024 and sell it today you would earn a total of 3,918 from holding Stepstone Group or generate 152.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Allient vs. Stepstone Group
Performance |
| Timeline |
| Allient |
| Stepstone Group |
Allient and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allient and Stepstone
The main advantage of trading using opposite Allient and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone's long position.The idea behind Allient and Stepstone Group 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.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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