Correlation Between Stepstone and Transocean
Can any of the company-specific risk be diversified away by investing in both Stepstone and Transocean 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 Transocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Transocean, you can compare the effects of market volatilities on Stepstone and Transocean 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 Transocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Transocean.
Diversification Opportunities for Stepstone and Transocean
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stepstone and Transocean is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Stepstone i.e., Stepstone and Transocean go up and down completely randomly.
Pair Corralation between Stepstone and Transocean
Given the investment horizon of 90 days Stepstone Group is expected to generate 0.68 times more return on investment than Transocean. However, Stepstone Group is 1.46 times less risky than Transocean. It trades about 0.09 of its potential returns per unit of risk. Transocean is currently generating about 0.0 per unit of risk. If you would invest 2,374 in Stepstone Group on September 19, 2024 and sell it today you would earn a total of 3,354 from holding Stepstone Group or generate 141.28% 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. Transocean
Performance |
Timeline |
Stepstone Group |
Transocean |
Stepstone and Transocean Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stepstone and Transocean
The main advantage of trading using opposite Stepstone and Transocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Transocean 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 Transocean will offset losses from the drop in Transocean's long position.Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
Transocean vs. Helmerich and Payne | Transocean vs. Sable Offshore Corp | Transocean vs. Borr Drilling | Transocean vs. Valaris |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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