Correlation Between Stepstone and Reynolds Consumer
Can any of the company-specific risk be diversified away by investing in both Stepstone and Reynolds Consumer 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 Reynolds Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Reynolds Consumer Products, you can compare the effects of market volatilities on Stepstone and Reynolds Consumer 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 Reynolds Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Reynolds Consumer.
Diversification Opportunities for Stepstone and Reynolds Consumer
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stepstone and Reynolds is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Reynolds Consumer Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reynolds Consumer 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 Reynolds Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reynolds Consumer has no effect on the direction of Stepstone i.e., Stepstone and Reynolds Consumer go up and down completely randomly.
Pair Corralation between Stepstone and Reynolds Consumer
Given the investment horizon of 90 days Stepstone Group is expected to generate 2.74 times more return on investment than Reynolds Consumer. However, Stepstone is 2.74 times more volatile than Reynolds Consumer Products. It trades about 0.08 of its potential returns per unit of risk. Reynolds Consumer Products is currently generating about 0.05 per unit of risk. If you would invest 5,879 in Stepstone Group on November 1, 2024 and sell it today you would earn a total of 616.50 from holding Stepstone Group or generate 10.49% 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. Reynolds Consumer Products
Performance |
| Timeline |
| Stepstone Group |
| Reynolds Consumer |
Stepstone and Reynolds Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Reynolds Consumer
The main advantage of trading using opposite Stepstone and Reynolds Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Reynolds Consumer 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 Reynolds Consumer will offset losses from the drop in Reynolds Consumer's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Reynolds Consumer vs. Greif Bros | Reynolds Consumer vs. Karat Packaging | Reynolds Consumer vs. Silgan Holdings | Reynolds Consumer vs. O I Glass |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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