Correlation Between Stepan and 58013MFC3
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By analyzing existing cross correlation between Stepan Company and MCDONALDS P MEDIUM, you can compare the effects of market volatilities on Stepan and 58013MFC3 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 58013MFC3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and 58013MFC3.
Diversification Opportunities for Stepan and 58013MFC3
Good diversification
The 3 months correlation between Stepan and 58013MFC3 is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and MCDONALDS P MEDIUM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCDONALDS P MEDIUM 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 58013MFC3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCDONALDS P MEDIUM has no effect on the direction of Stepan i.e., Stepan and 58013MFC3 go up and down completely randomly.
Pair Corralation between Stepan and 58013MFC3
Considering the 90-day investment horizon Stepan Company is expected to under-perform the 58013MFC3. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 26.07 times less risky than 58013MFC3. The stock trades about -0.03 of its potential returns per unit of risk. The MCDONALDS P MEDIUM is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,314 in MCDONALDS P MEDIUM on September 5, 2024 and sell it today you would lose (1,050) from holding MCDONALDS P MEDIUM or give up 11.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.53% |
| Values | Daily Returns |
Stepan Company vs. MCDONALDS P MEDIUM
Performance |
| Timeline |
| Stepan Company |
| MCDONALDS P MEDIUM |
Stepan and 58013MFC3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and 58013MFC3
The main advantage of trading using opposite Stepan and 58013MFC3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, 58013MFC3 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 58013MFC3 will offset losses from the drop in 58013MFC3's long position.The idea behind Stepan Company and MCDONALDS P MEDIUM 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.| 58013MFC3 vs. Stepan Company | 58013MFC3 vs. Hafnia Limited | 58013MFC3 vs. Apogee Enterprises | 58013MFC3 vs. JD Sports Fashion |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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