Correlation Between OFS Credit and Stepstone
Can any of the company-specific risk be diversified away by investing in both OFS Credit 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 OFS Credit and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OFS Credit and Stepstone Group, you can compare the effects of market volatilities on OFS Credit 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 OFS Credit with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Credit and Stepstone.
Diversification Opportunities for OFS Credit and Stepstone
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OFS and Stepstone is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding OFS Credit and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and OFS Credit 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 OFS Credit 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 OFS Credit i.e., OFS Credit and Stepstone go up and down completely randomly.
Pair Corralation between OFS Credit and Stepstone
Given the investment horizon of 90 days OFS Credit is expected to generate 16.83 times less return on investment than Stepstone. But when comparing it to its historical volatility, OFS Credit is 1.37 times less risky than Stepstone. It trades about 0.01 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,388 in Stepstone Group on August 31, 2024 and sell it today you would earn a total of 4,201 from holding Stepstone Group or generate 175.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OFS Credit vs. Stepstone Group
Performance |
| Timeline |
| OFS Credit |
| Stepstone Group |
OFS Credit and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Credit and Stepstone
The main advantage of trading using opposite OFS Credit and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Credit 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.| OFS Credit vs. WhiteHorse Finance | OFS Credit vs. Monroe Capital Corp | OFS Credit vs. Portman Ridge Finance | OFS Credit vs. Fidus Investment 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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