Correlation Between Stepstone and Relx PLC
Can any of the company-specific risk be diversified away by investing in both Stepstone and Relx PLC 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 Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Relx PLC ADR, you can compare the effects of market volatilities on Stepstone and Relx PLC 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 Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Relx PLC.
Diversification Opportunities for Stepstone and Relx PLC
Very good diversification
The 3 months correlation between Stepstone and Relx is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR 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 Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of Stepstone i.e., Stepstone and Relx PLC go up and down completely randomly.
Pair Corralation between Stepstone and Relx PLC
Given the investment horizon of 90 days Stepstone Group is expected to generate 2.04 times more return on investment than Relx PLC. However, Stepstone is 2.04 times more volatile than Relx PLC ADR. It trades about 0.16 of its potential returns per unit of risk. Relx PLC ADR is currently generating about 0.09 per unit of risk. If you would invest 2,579 in Stepstone Group on September 14, 2024 and sell it today you would earn a total of 3,617 from holding Stepstone Group or generate 140.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Relx PLC ADR
Performance |
| Timeline |
| Stepstone Group |
| Relx PLC ADR |
Stepstone and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Relx PLC
The main advantage of trading using opposite Stepstone and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Relx PLC 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| Stepstone vs. Visa Class A | Stepstone vs. Diamond Hill Investment | Stepstone vs. Distoken Acquisition | Stepstone vs. AllianceBernstein Holding LP |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |