Correlation Between Stepan and South Jersey
Can any of the company-specific risk be diversified away by investing in both Stepan and South Jersey 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 South Jersey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and South Jersey Industries, you can compare the effects of market volatilities on Stepan and South Jersey 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 South Jersey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and South Jersey.
Diversification Opportunities for Stepan and South Jersey
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stepan and South is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and South Jersey Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Jersey Industries 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 South Jersey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Jersey Industries has no effect on the direction of Stepan i.e., Stepan and South Jersey go up and down completely randomly.
Pair Corralation between Stepan and South Jersey
If you would invest 6,116 in Stepan Company on December 3, 2024 and sell it today you would earn a total of 60.00 from holding Stepan Company or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Stepan Company vs. South Jersey Industries
Performance |
| Timeline |
| Stepan Company |
| South Jersey Industries |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Stepan and South Jersey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and South Jersey
The main advantage of trading using opposite Stepan and South Jersey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, South Jersey 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 South Jersey will offset losses from the drop in South Jersey's long position.The idea behind Stepan Company and South Jersey Industries 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.| South Jersey vs. Drilling Tools International | South Jersey vs. Global E Online | South Jersey vs. Entravision Communications | South Jersey vs. Patterson UTI Energy |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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