Correlation Between Stepstone and Scholastic
Can any of the company-specific risk be diversified away by investing in both Stepstone and Scholastic 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 Scholastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Scholastic, you can compare the effects of market volatilities on Stepstone and Scholastic 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 Scholastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Scholastic.
Diversification Opportunities for Stepstone and Scholastic
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stepstone and Scholastic is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Scholastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scholastic 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 Scholastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scholastic has no effect on the direction of Stepstone i.e., Stepstone and Scholastic go up and down completely randomly.
Pair Corralation between Stepstone and Scholastic
Given the investment horizon of 90 days Stepstone Group is expected to generate 0.38 times more return on investment than Scholastic. However, Stepstone Group is 2.6 times less risky than Scholastic. It trades about 0.14 of its potential returns per unit of risk. Scholastic is currently generating about -0.17 per unit of risk. If you would invest 5,833 in Stepstone Group on October 20, 2024 and sell it today you would earn a total of 324.00 from holding Stepstone Group or generate 5.55% 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. Scholastic
Performance |
| Timeline |
| Stepstone Group |
| Scholastic |
Stepstone and Scholastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Scholastic
The main advantage of trading using opposite Stepstone and Scholastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Scholastic 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 Scholastic will offset losses from the drop in Scholastic's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Scholastic vs. New York Times | Scholastic vs. John Wiley Sons | Scholastic vs. Gannett Co | Scholastic vs. Lee Enterprises Incorporated |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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