Correlation Between Stepan and Payoneer Global
Can any of the company-specific risk be diversified away by investing in both Stepan and Payoneer Global 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 Payoneer Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Payoneer Global, you can compare the effects of market volatilities on Stepan and Payoneer Global 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 Payoneer Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Payoneer Global.
Diversification Opportunities for Stepan and Payoneer Global
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stepan and Payoneer is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Payoneer Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payoneer Global 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 Payoneer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payoneer Global has no effect on the direction of Stepan i.e., Stepan and Payoneer Global go up and down completely randomly.
Pair Corralation between Stepan and Payoneer Global
Considering the 90-day investment horizon Stepan Company is expected to generate 0.52 times more return on investment than Payoneer Global. However, Stepan Company is 1.94 times less risky than Payoneer Global. It trades about -0.15 of its potential returns per unit of risk. Payoneer Global is currently generating about -0.31 per unit of risk. If you would invest 6,116 in Stepan Company on December 4, 2024 and sell it today you would lose (405.00) from holding Stepan Company or give up 6.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Payoneer Global
Performance |
| Timeline |
| Stepan Company |
| Payoneer Global |
Stepan and Payoneer Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Payoneer Global
The main advantage of trading using opposite Stepan and Payoneer Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Payoneer Global 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 Payoneer Global will offset losses from the drop in Payoneer Global's long position.The idea behind Stepan Company and Payoneer Global 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.| Payoneer Global vs. SentinelOne | Payoneer Global vs. CyberArk Software | Payoneer Global vs. MongoDB | Payoneer Global vs. Appian Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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