Correlation Between Confluent and StoneCo
Can any of the company-specific risk be diversified away by investing in both Confluent and StoneCo 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 Confluent and StoneCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Confluent and StoneCo, you can compare the effects of market volatilities on Confluent and StoneCo 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 Confluent with a short position of StoneCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Confluent and StoneCo.
Diversification Opportunities for Confluent and StoneCo
Excellent diversification
The 3 months correlation between Confluent and StoneCo is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and StoneCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StoneCo and Confluent 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 Confluent are associated (or correlated) with StoneCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StoneCo has no effect on the direction of Confluent i.e., Confluent and StoneCo go up and down completely randomly.
Pair Corralation between Confluent and StoneCo
Given the investment horizon of 90 days Confluent is expected to under-perform the StoneCo. But the stock apears to be less risky and, when comparing its historical volatility, Confluent is 1.1 times less risky than StoneCo. The stock trades about -0.18 of its potential returns per unit of risk. The StoneCo is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 809.00 in StoneCo on October 23, 2024 and sell it today you would earn a total of 47.00 from holding StoneCo or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Confluent vs. StoneCo
Performance |
| Timeline |
| Confluent |
| StoneCo |
Confluent and StoneCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Confluent and StoneCo
The main advantage of trading using opposite Confluent and StoneCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Confluent position performs unexpectedly, StoneCo 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 StoneCo will offset losses from the drop in StoneCo's long position.| Confluent vs. DigitalOcean Holdings | Confluent vs. Doximity | Confluent vs. Gitlab Inc | Confluent vs. Global E Online |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |