Correlation Between Stepan and PENSKE
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By analyzing existing cross correlation between Stepan Company and PENSKE 57 01 FEB 28, you can compare the effects of market volatilities on Stepan and PENSKE 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 PENSKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and PENSKE.
Diversification Opportunities for Stepan and PENSKE
Good diversification
The 3 months correlation between Stepan and PENSKE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and PENSKE 57 01 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENSKE 57 01 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 PENSKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENSKE 57 01 has no effect on the direction of Stepan i.e., Stepan and PENSKE go up and down completely randomly.
Pair Corralation between Stepan and PENSKE
Considering the 90-day investment horizon Stepan Company is expected to under-perform the PENSKE. In addition to that, Stepan is 3.41 times more volatile than PENSKE 57 01 FEB 28. It trades about -0.01 of its total potential returns per unit of risk. PENSKE 57 01 FEB 28 is currently generating about 0.03 per unit of volatility. If you would invest 9,835 in PENSKE 57 01 FEB 28 on September 15, 2024 and sell it today you would earn a total of 244.00 from holding PENSKE 57 01 FEB 28 or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.07% |
| Values | Daily Returns |
Stepan Company vs. PENSKE 57 01 FEB 28
Performance |
| Timeline |
| Stepan Company |
| PENSKE 57 01 |
Stepan and PENSKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and PENSKE
The main advantage of trading using opposite Stepan and PENSKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, PENSKE 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 PENSKE will offset losses from the drop in PENSKE's long position.The idea behind Stepan Company and PENSKE 57 01 FEB 28 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.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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