Correlation Between Stepstone and ECGI Holdings
Can any of the company-specific risk be diversified away by investing in both Stepstone and ECGI Holdings 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 ECGI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and ECGI Holdings, you can compare the effects of market volatilities on Stepstone and ECGI Holdings 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 ECGI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and ECGI Holdings.
Diversification Opportunities for Stepstone and ECGI Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stepstone and ECGI is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and ECGI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECGI Holdings 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 ECGI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECGI Holdings has no effect on the direction of Stepstone i.e., Stepstone and ECGI Holdings go up and down completely randomly.
Pair Corralation between Stepstone and ECGI Holdings
Given the investment horizon of 90 days Stepstone is expected to generate 4.88 times less return on investment than ECGI Holdings. But when comparing it to its historical volatility, Stepstone Group is 9.52 times less risky than ECGI Holdings. It trades about 0.12 of its potential returns per unit of risk. ECGI Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.82 in ECGI Holdings on September 12, 2024 and sell it today you would lose (0.71) from holding ECGI Holdings or give up 86.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. ECGI Holdings
Performance |
| Timeline |
| Stepstone Group |
| ECGI Holdings |
Stepstone and ECGI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and ECGI Holdings
The main advantage of trading using opposite Stepstone and ECGI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, ECGI Holdings 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 ECGI Holdings will offset losses from the drop in ECGI Holdings' long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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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 Directory module to find actively traded commodities issued by global exchanges.
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