Correlation Between Step One and GO2 People
Can any of the company-specific risk be diversified away by investing in both Step One and GO2 People 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 Step One and GO2 People into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Step One Clothing and GO2 People, you can compare the effects of market volatilities on Step One and GO2 People 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 Step One with a short position of GO2 People. Check out your portfolio center. Please also check ongoing floating volatility patterns of Step One and GO2 People.
Diversification Opportunities for Step One and GO2 People
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Step and GO2 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Step One Clothing and GO2 People in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GO2 People and Step One 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 Step One Clothing are associated (or correlated) with GO2 People. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GO2 People has no effect on the direction of Step One i.e., Step One and GO2 People go up and down completely randomly.
Pair Corralation between Step One and GO2 People
Assuming the 90 days trading horizon Step One is expected to generate 4.96 times less return on investment than GO2 People. But when comparing it to its historical volatility, Step One Clothing is 11.52 times less risky than GO2 People. It trades about 0.12 of its potential returns per unit of risk. GO2 People is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1.40 in GO2 People on September 1, 2024 and sell it today you would earn a total of 65.60 from holding GO2 People or generate 4685.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Step One Clothing vs. GO2 People
Performance |
| Timeline |
| Step One Clothing |
| GO2 People |
Step One and GO2 People Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Step One and GO2 People
The main advantage of trading using opposite Step One and GO2 People positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Step One position performs unexpectedly, GO2 People 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 GO2 People will offset losses from the drop in GO2 People's long position.| Step One vs. WiseTech Global Limited | Step One vs. Red Hill Iron | Step One vs. Champion Iron | Step One vs. Hutchison Telecommunications |
| GO2 People vs. Kkr Credit Income | GO2 People vs. Bank of Queensland | GO2 People vs. Alto Metals | GO2 People vs. Carlton Investments |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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