Correlation Between Flexible Solutions and Stepstone
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions 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 Flexible Solutions and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and Stepstone Group, you can compare the effects of market volatilities on Flexible Solutions 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 Flexible Solutions with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Stepstone.
Diversification Opportunities for Flexible Solutions and Stepstone
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Flexible and Stepstone is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Flexible Solutions 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 Flexible Solutions International 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 Flexible Solutions i.e., Flexible Solutions and Stepstone go up and down completely randomly.
Pair Corralation between Flexible Solutions and Stepstone
Considering the 90-day investment horizon Flexible Solutions International is expected to generate 1.61 times more return on investment than Stepstone. However, Flexible Solutions is 1.61 times more volatile than Stepstone Group. It trades about 0.09 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.14 per unit of risk. If you would invest 323.00 in Flexible Solutions International on September 12, 2024 and sell it today you would earn a total of 57.00 from holding Flexible Solutions International or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. Stepstone Group
Performance |
| Timeline |
| Flexible Solutions |
| Stepstone Group |
Flexible Solutions and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and Stepstone
The main advantage of trading using opposite Flexible Solutions and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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.| Flexible Solutions vs. LyondellBasell Industries NV | Flexible Solutions vs. International Flavors Fragrances | Flexible Solutions vs. Cabot | Flexible Solutions vs. Westlake Chemical |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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