Correlation Between Stepstone and Bt Brands
Can any of the company-specific risk be diversified away by investing in both Stepstone and Bt Brands 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 Stepstone and Bt Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Bt Brands, you can compare the effects of market volatilities on Stepstone and Bt Brands 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 Stepstone with a short position of Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Bt Brands.
Diversification Opportunities for Stepstone and Bt Brands
Significant diversification
The 3 months correlation between Stepstone and BTBD is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands and Stepstone 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 Stepstone Group are associated (or correlated) with Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Stepstone i.e., Stepstone and Bt Brands go up and down completely randomly.
Pair Corralation between Stepstone and Bt Brands
Given the investment horizon of 90 days Stepstone Group is expected to generate 0.76 times more return on investment than Bt Brands. However, Stepstone Group is 1.32 times less risky than Bt Brands. It trades about 0.13 of its potential returns per unit of risk. Bt Brands is currently generating about -0.03 per unit of risk. If you would invest 6,131 in Stepstone Group on August 31, 2024 and sell it today you would earn a total of 473.00 from holding Stepstone Group or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Bt Brands
Performance |
| Timeline |
| Stepstone Group |
| Bt Brands |
Stepstone and Bt Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Bt Brands
The main advantage of trading using opposite Stepstone and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Bt Brands vs. RLJ Lodging Trust | Bt Brands vs. Aquagold International | Bt Brands vs. Stepstone Group | Bt Brands vs. Morningstar Unconstrained Allocation |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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