Correlation Between Stepstone and Invesco California
Can any of the company-specific risk be diversified away by investing in both Stepstone and Invesco California 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 Invesco California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Invesco California Value, you can compare the effects of market volatilities on Stepstone and Invesco California 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 Invesco California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Invesco California.
Diversification Opportunities for Stepstone and Invesco California
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stepstone and Invesco is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Invesco California Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco California Value 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 Invesco California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco California Value has no effect on the direction of Stepstone i.e., Stepstone and Invesco California go up and down completely randomly.
Pair Corralation between Stepstone and Invesco California
Given the investment horizon of 90 days Stepstone Group is expected to generate 4.13 times more return on investment than Invesco California. However, Stepstone is 4.13 times more volatile than Invesco California Value. It trades about 0.14 of its potential returns per unit of risk. Invesco California Value is currently generating about -0.04 per unit of risk. If you would invest 6,028 in Stepstone Group on August 24, 2024 and sell it today you would earn a total of 573.00 from holding Stepstone Group or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Stepstone Group vs. Invesco California Value
Performance |
| Timeline |
| Stepstone Group |
| Invesco California Value |
Stepstone and Invesco California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Invesco California
The main advantage of trading using opposite Stepstone and Invesco California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Invesco California 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 Invesco California will offset losses from the drop in Invesco California's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Invesco California vs. Pimco California Municipal | Invesco California vs. Invesco Pennsylvania Value | Invesco California vs. Nuveen California Dividend | Invesco California vs. Invesco Advantage MIT |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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