Correlation Between TPG and Stepstone
Can any of the company-specific risk be diversified away by investing in both TPG and Stepstone 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 TPG and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Inc and Stepstone Group, you can compare the effects of market volatilities on TPG and Stepstone 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 TPG with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG and Stepstone.
Diversification Opportunities for TPG and Stepstone
Very poor diversification
The 3 months correlation between TPG and Stepstone is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding TPG Inc and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and TPG 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 TPG Inc are associated (or correlated) with Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of TPG i.e., TPG and Stepstone go up and down completely randomly.
Pair Corralation between TPG and Stepstone
Considering the 90-day investment horizon TPG is expected to generate 2.0 times less return on investment than Stepstone. In addition to that, TPG is 1.12 times more volatile than Stepstone Group. It trades about 0.07 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.16 per unit of volatility. If you would invest 6,013 in Stepstone Group on September 1, 2024 and sell it today you would earn a total of 576.00 from holding Stepstone Group or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG Inc vs. Stepstone Group
Performance |
| Timeline |
| TPG Inc |
| Stepstone Group |
TPG and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG and Stepstone
The main advantage of trading using opposite TPG and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone's long position.| TPG vs. Ares Management LP | TPG vs. Patria Investments | TPG vs. Apollo Global Management | TPG vs. Cion Investment Corp |
| Stepstone vs. Visa Class A | Stepstone vs. Diamond Hill Investment | Stepstone vs. Distoken Acquisition | Stepstone vs. Associated Capital Group |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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