Correlation Between Vita Coco and Stepstone
Can any of the company-specific risk be diversified away by investing in both Vita Coco 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 Vita Coco and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vita Coco and Stepstone Group, you can compare the effects of market volatilities on Vita Coco 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 Vita Coco with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Stepstone.
Diversification Opportunities for Vita Coco and Stepstone
Very poor diversification
The 3 months correlation between Vita and Stepstone is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Vita Coco 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 Vita Coco 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 Vita Coco i.e., Vita Coco and Stepstone go up and down completely randomly.
Pair Corralation between Vita Coco and Stepstone
Given the investment horizon of 90 days Vita Coco is expected to generate 2.77 times less return on investment than Stepstone. In addition to that, Vita Coco is 1.15 times more volatile than Stepstone Group. It trades about 0.06 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.19 per unit of volatility. If you would invest 2,530 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 4,059 from holding Stepstone Group or generate 160.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vita Coco vs. Stepstone Group
Performance |
| Timeline |
| Vita Coco |
| Stepstone Group |
Vita Coco and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vita Coco and Stepstone
The main advantage of trading using opposite Vita Coco and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco 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.| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Coca Cola European Partners | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. Monster Beverage Corp |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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