Correlation Between Stepstone and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Stepstone and Lowes Companies 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 Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Lowes Companies, you can compare the effects of market volatilities on Stepstone and Lowes Companies 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 Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Lowes Companies.
Diversification Opportunities for Stepstone and Lowes Companies
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stepstone and Lowes is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Stepstone i.e., Stepstone and Lowes Companies go up and down completely randomly.
Pair Corralation between Stepstone and Lowes Companies
Given the investment horizon of 90 days Stepstone Group is expected to generate 1.47 times more return on investment than Lowes Companies. However, Stepstone is 1.47 times more volatile than Lowes Companies. It trades about 0.15 of its potential returns per unit of risk. Lowes Companies is currently generating about 0.14 per unit of risk. If you would invest 4,443 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 2,146 from holding Stepstone Group or generate 48.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Lowes Companies
Performance |
| Timeline |
| Stepstone Group |
| Lowes Companies |
Stepstone and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Lowes Companies
The main advantage of trading using opposite Stepstone and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Lowes Companies vs. Floor Decor Holdings | Lowes Companies vs. Arhaus Inc | Lowes Companies vs. Haverty Furniture Companies | Lowes Companies vs. Home Depot |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |