Correlation Between Stepstone and Horizon Space
Can any of the company-specific risk be diversified away by investing in both Stepstone and Horizon Space 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 Horizon Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Horizon Space Acquisition, you can compare the effects of market volatilities on Stepstone and Horizon Space 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 Horizon Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Horizon Space.
Diversification Opportunities for Stepstone and Horizon Space
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stepstone and Horizon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Horizon Space Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Space Acquisition 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 Horizon Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Space Acquisition has no effect on the direction of Stepstone i.e., Stepstone and Horizon Space go up and down completely randomly.
Pair Corralation between Stepstone and Horizon Space
Given the investment horizon of 90 days Stepstone Group is expected to under-perform the Horizon Space. But the stock apears to be less risky and, when comparing its historical volatility, Stepstone Group is 15.06 times less risky than Horizon Space. The stock trades about -0.21 of its potential returns per unit of risk. The Horizon Space Acquisition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2.97 in Horizon Space Acquisition on September 13, 2024 and sell it today you would lose (0.49) from holding Horizon Space Acquisition or give up 16.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 27.27% |
| Values | Daily Returns |
Stepstone Group vs. Horizon Space Acquisition
Performance |
| Timeline |
| Stepstone Group |
| Horizon Space Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Stepstone and Horizon Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Horizon Space
The main advantage of trading using opposite Stepstone and Horizon Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Horizon Space 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 Horizon Space will offset losses from the drop in Horizon Space's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Horizon Space vs. United Parks Resorts | Horizon Space vs. Funko Inc | Horizon Space vs. Canlan Ice Sports | Horizon Space vs. Saia Inc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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