Correlation Between Stepan and Capital Clean
Can any of the company-specific risk be diversified away by investing in both Stepan and Capital Clean 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 Stepan and Capital Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Capital Clean Energy, you can compare the effects of market volatilities on Stepan and Capital Clean 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 Stepan with a short position of Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Capital Clean.
Diversification Opportunities for Stepan and Capital Clean
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stepan and Capital is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and Stepan 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 Stepan Company are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Stepan i.e., Stepan and Capital Clean go up and down completely randomly.
Pair Corralation between Stepan and Capital Clean
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Capital Clean. In addition to that, Stepan is 1.02 times more volatile than Capital Clean Energy. It trades about -0.06 of its total potential returns per unit of risk. Capital Clean Energy is currently generating about 0.05 per unit of volatility. If you would invest 1,195 in Capital Clean Energy on January 10, 2025 and sell it today you would earn a total of 505.00 from holding Capital Clean Energy or generate 42.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Capital Clean Energy
Performance |
| Timeline |
| Stepan Company |
| Capital Clean Energy |
Stepan and Capital Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Capital Clean
The main advantage of trading using opposite Stepan and Capital Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Capital Clean 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 Capital Clean will offset losses from the drop in Capital Clean's long position.| Stepan vs. Orion Engineered Carbons | Stepan vs. International Flavors Fragrances | Stepan vs. Sociedad Quimica y | Stepan vs. Albemarle Corp |
| Capital Clean vs. Air Lease | Capital Clean vs. Global Net Lease | Capital Clean vs. Northstar Clean Technologies | Capital Clean vs. Aduro Clean Technologies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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