Correlation Between Stepstone and Oportun Financial
Can any of the company-specific risk be diversified away by investing in both Stepstone and Oportun Financial 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 Oportun Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Oportun Financial Corp, you can compare the effects of market volatilities on Stepstone and Oportun Financial 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 Oportun Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Oportun Financial.
Diversification Opportunities for Stepstone and Oportun Financial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stepstone and Oportun is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Oportun Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oportun Financial 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 Oportun Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oportun Financial Corp has no effect on the direction of Stepstone i.e., Stepstone and Oportun Financial go up and down completely randomly.
Pair Corralation between Stepstone and Oportun Financial
Given the investment horizon of 90 days Stepstone Group is expected to generate 0.37 times more return on investment than Oportun Financial. However, Stepstone Group is 2.72 times less risky than Oportun Financial. It trades about 0.09 of its potential returns per unit of risk. Oportun Financial Corp is currently generating about 0.02 per unit of risk. If you would invest 2,702 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 3,887 from holding Stepstone Group or generate 143.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Oportun Financial Corp
Performance |
| Timeline |
| Stepstone Group |
| Oportun Financial Corp |
Stepstone and Oportun Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Oportun Financial
The main advantage of trading using opposite Stepstone and Oportun Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Oportun Financial 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 Oportun Financial will offset losses from the drop in Oportun Financial's 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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