Correlation Between Universal Technical and Stepstone
Can any of the company-specific risk be diversified away by investing in both Universal Technical 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 Universal Technical and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Technical Institute and Stepstone Group, you can compare the effects of market volatilities on Universal Technical 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 Universal Technical with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Technical and Stepstone.
Diversification Opportunities for Universal Technical and Stepstone
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Stepstone is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Universal Technical 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 Universal Technical Institute 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 Universal Technical i.e., Universal Technical and Stepstone go up and down completely randomly.
Pair Corralation between Universal Technical and Stepstone
Considering the 90-day investment horizon Universal Technical Institute is expected to generate 1.24 times more return on investment than Stepstone. However, Universal Technical is 1.24 times more volatile than Stepstone Group. It trades about 0.12 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.09 per unit of risk. If you would invest 601.00 in Universal Technical Institute on September 3, 2024 and sell it today you would earn a total of 1,986 from holding Universal Technical Institute or generate 330.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Technical Institute vs. Stepstone Group
Performance |
| Timeline |
| Universal Technical |
| Stepstone Group |
Universal Technical and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Technical and Stepstone
The main advantage of trading using opposite Universal Technical and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Technical 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.| Universal Technical vs. Laureate Education | Universal Technical vs. Strategic Education | Universal Technical vs. Grand Canyon Education | Universal Technical vs. American Public Education |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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