Correlation Between Scholastic and Stepstone
Can any of the company-specific risk be diversified away by investing in both Scholastic 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 Scholastic and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scholastic and Stepstone Group, you can compare the effects of market volatilities on Scholastic 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 Scholastic with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and Stepstone.
Diversification Opportunities for Scholastic and Stepstone
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scholastic and Stepstone is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Scholastic 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 Scholastic 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 Scholastic i.e., Scholastic and Stepstone go up and down completely randomly.
Pair Corralation between Scholastic and Stepstone
Given the investment horizon of 90 days Scholastic is expected to generate 1.43 times more return on investment than Stepstone. However, Scholastic is 1.43 times more volatile than Stepstone Group. It trades about 0.03 of its potential returns per unit of risk. Stepstone Group is currently generating about -0.16 per unit of risk. If you would invest 2,541 in Scholastic on September 15, 2024 and sell it today you would earn a total of 17.00 from holding Scholastic or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scholastic vs. Stepstone Group
Performance |
| Timeline |
| Scholastic |
| Stepstone Group |
Scholastic and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scholastic and Stepstone
The main advantage of trading using opposite Scholastic and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic 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.| Scholastic vs. New York Times | Scholastic vs. John Wiley Sons | Scholastic vs. Gannett Co | Scholastic vs. Lee Enterprises Incorporated |
| Stepstone vs. Visa Class A | Stepstone vs. Diamond Hill Investment | Stepstone vs. Distoken Acquisition | Stepstone vs. AllianceBernstein Holding LP |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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