Correlation Between Stepstone and Socket Mobile
Can any of the company-specific risk be diversified away by investing in both Stepstone and Socket Mobile 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 Socket Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Socket Mobile, you can compare the effects of market volatilities on Stepstone and Socket Mobile 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 Socket Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Socket Mobile.
Diversification Opportunities for Stepstone and Socket Mobile
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stepstone and Socket is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Socket Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socket Mobile 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 Socket Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socket Mobile has no effect on the direction of Stepstone i.e., Stepstone and Socket Mobile go up and down completely randomly.
Pair Corralation between Stepstone and Socket Mobile
Given the investment horizon of 90 days Stepstone is expected to generate 3.71 times less return on investment than Socket Mobile. But when comparing it to its historical volatility, Stepstone Group is 1.14 times less risky than Socket Mobile. It trades about 0.13 of its potential returns per unit of risk. Socket Mobile is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 110.00 in Socket Mobile on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Socket Mobile or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Stepstone Group vs. Socket Mobile
Performance |
| Timeline |
| Stepstone Group |
| Socket Mobile |
Stepstone and Socket Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Socket Mobile
The main advantage of trading using opposite Stepstone and Socket Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Socket Mobile 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 Socket Mobile will offset losses from the drop in Socket Mobile's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Socket Mobile vs. RLJ Lodging Trust | Socket Mobile vs. Aquagold International | Socket Mobile vs. Stepstone Group | Socket Mobile vs. Morningstar Unconstrained Allocation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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