Correlation Between Genuine Parts and Stepstone
Can any of the company-specific risk be diversified away by investing in both Genuine Parts 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 Genuine Parts and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genuine Parts Co and Stepstone Group, you can compare the effects of market volatilities on Genuine Parts 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 Genuine Parts with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and Stepstone.
Diversification Opportunities for Genuine Parts and Stepstone
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Genuine and Stepstone is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Genuine Parts 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 Genuine Parts Co 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 Genuine Parts i.e., Genuine Parts and Stepstone go up and down completely randomly.
Pair Corralation between Genuine Parts and Stepstone
Considering the 90-day investment horizon Genuine Parts Co is expected to under-perform the Stepstone. In addition to that, Genuine Parts is 1.54 times more volatile than Stepstone Group. It trades about -0.04 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.16 per unit of volatility. If you would invest 5,728 in Stepstone Group on August 28, 2024 and sell it today you would earn a total of 945.00 from holding Stepstone Group or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genuine Parts Co vs. Stepstone Group
Performance |
| Timeline |
| Genuine Parts |
| Stepstone Group |
Genuine Parts and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genuine Parts and Stepstone
The main advantage of trading using opposite Genuine Parts and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts 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.| Genuine Parts vs. Dover | Genuine Parts vs. Cincinnati Financial | Genuine Parts vs. Leggett Platt Incorporated | Genuine Parts vs. WW Grainger |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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