Correlation Between Stepstone and Revolve Group
Can any of the company-specific risk be diversified away by investing in both Stepstone and Revolve Group 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 Revolve Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Revolve Group LLC, you can compare the effects of market volatilities on Stepstone and Revolve Group 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 Revolve Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Revolve Group.
Diversification Opportunities for Stepstone and Revolve Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stepstone and Revolve is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Revolve Group LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolve Group LLC 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 Revolve Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolve Group LLC has no effect on the direction of Stepstone i.e., Stepstone and Revolve Group go up and down completely randomly.
Pair Corralation between Stepstone and Revolve Group
Given the investment horizon of 90 days Stepstone is expected to generate 1.76 times less return on investment than Revolve Group. But when comparing it to its historical volatility, Stepstone Group is 2.22 times less risky than Revolve Group. It trades about 0.17 of its potential returns per unit of risk. Revolve Group LLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,796 in Revolve Group LLC on September 5, 2024 and sell it today you would earn a total of 1,757 from holding Revolve Group LLC or generate 97.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Revolve Group LLC
Performance |
| Timeline |
| Stepstone Group |
| Revolve Group LLC |
Stepstone and Revolve Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Revolve Group
The main advantage of trading using opposite Stepstone and Revolve Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Revolve Group 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 Revolve Group will offset losses from the drop in Revolve Group's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Revolve Group vs. Appian Corp | Revolve Group vs. Okta Inc | Revolve Group vs. MongoDB | Revolve Group vs. Twilio Inc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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