Correlation Between Stepstone and OFS Credit
Can any of the company-specific risk be diversified away by investing in both Stepstone and OFS Credit 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 OFS Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and OFS Credit, you can compare the effects of market volatilities on Stepstone and OFS Credit 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 OFS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and OFS Credit.
Diversification Opportunities for Stepstone and OFS Credit
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stepstone and OFS is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and OFS Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Credit 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 OFS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Credit has no effect on the direction of Stepstone i.e., Stepstone and OFS Credit go up and down completely randomly.
Pair Corralation between Stepstone and OFS Credit
Given the investment horizon of 90 days Stepstone Group is expected to generate 1.37 times more return on investment than OFS Credit. However, Stepstone is 1.37 times more volatile than OFS Credit. It trades about 0.14 of its potential returns per unit of risk. OFS Credit is currently generating about 0.01 per unit of risk. If you would invest 2,388 in Stepstone Group on August 31, 2024 and sell it today you would earn a total of 4,201 from holding Stepstone Group or generate 175.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. OFS Credit
Performance |
| Timeline |
| Stepstone Group |
| OFS Credit |
Stepstone and OFS Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and OFS Credit
The main advantage of trading using opposite Stepstone and OFS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, OFS Credit 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 OFS Credit will offset losses from the drop in OFS Credit's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| OFS Credit vs. WhiteHorse Finance | OFS Credit vs. Monroe Capital Corp | OFS Credit vs. Portman Ridge Finance | OFS Credit vs. Fidus Investment Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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