Correlation Between Stepstone and Freedom Holding
Can any of the company-specific risk be diversified away by investing in both Stepstone and Freedom Holding 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 Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Freedom Holding Corp, you can compare the effects of market volatilities on Stepstone and Freedom Holding 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 Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Freedom Holding.
Diversification Opportunities for Stepstone and Freedom Holding
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Stepstone and Freedom is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Stepstone i.e., Stepstone and Freedom Holding go up and down completely randomly.
Pair Corralation between Stepstone and Freedom Holding
Given the investment horizon of 90 days Stepstone Group is expected to generate 1.54 times more return on investment than Freedom Holding. However, Stepstone is 1.54 times more volatile than Freedom Holding Corp. It trades about 0.12 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.16 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 458.00 from holding Stepstone Group or generate 7.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Freedom Holding Corp
Performance |
| Timeline |
| Stepstone Group |
| Freedom Holding Corp |
Stepstone and Freedom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Freedom Holding
The main advantage of trading using opposite Stepstone and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Freedom Holding 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 Freedom Holding will offset losses from the drop in Freedom Holding's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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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