Correlation Between Freedom Holding and Stepstone
Can any of the company-specific risk be diversified away by investing in both Freedom Holding 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 Freedom Holding and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Holding Corp and Stepstone Group, you can compare the effects of market volatilities on Freedom Holding 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 Freedom Holding with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and Stepstone.
Diversification Opportunities for Freedom Holding and Stepstone
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Freedom and Stepstone is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Freedom Holding 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 Freedom Holding Corp 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 Freedom Holding i.e., Freedom Holding and Stepstone go up and down completely randomly.
Pair Corralation between Freedom Holding and Stepstone
Given the investment horizon of 90 days Freedom Holding is expected to generate 1.13 times less return on investment than Stepstone. But when comparing it to its historical volatility, Freedom Holding Corp is 1.54 times less risky than Stepstone. It trades about 0.16 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,131 in Stepstone Group on August 31, 2024 and sell it today you would earn a total of 458.00 from holding Stepstone Group or generate 7.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Holding Corp vs. Stepstone Group
Performance |
| Timeline |
| Freedom Holding Corp |
| Stepstone Group |
Freedom Holding and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and Stepstone
The main advantage of trading using opposite Freedom Holding and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding 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.| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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