Correlation Between Stepan and Green
Can any of the company-specific risk be diversified away by investing in both Stepan and Green 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 Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Green And Hill, you can compare the effects of market volatilities on Stepan and Green 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 Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Green.
Diversification Opportunities for Stepan and Green
Very good diversification
The 3 months correlation between Stepan and Green is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Green And Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green And Hill 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 Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green And Hill has no effect on the direction of Stepan i.e., Stepan and Green go up and down completely randomly.
Pair Corralation between Stepan and Green
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Green. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 155.96 times less risky than Green. The stock trades about -0.03 of its potential returns per unit of risk. The Green And Hill is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Green And Hill on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Green And Hill or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.05% |
| Values | Daily Returns |
Stepan Company vs. Green And Hill
Performance |
| Timeline |
| Stepan Company |
| Green And Hill |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Stepan and Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Green
The main advantage of trading using opposite Stepan and Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Green 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 Green will offset losses from the drop in Green's long position.The idea behind Stepan Company and Green And Hill pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Green vs. Lindblad Expeditions Holdings | Green vs. Mesa Air Group | Green vs. National CineMedia | Green vs. WiMi Hologram Cloud |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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