Correlation Between Via Renewables and Stepstone
Can any of the company-specific risk be diversified away by investing in both Via Renewables 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 Via Renewables and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Via Renewables and Stepstone Group, you can compare the effects of market volatilities on Via Renewables 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 Via Renewables with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and Stepstone.
Diversification Opportunities for Via Renewables and Stepstone
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Via and Stepstone is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Via Renewables 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 Via Renewables 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 Via Renewables i.e., Via Renewables and Stepstone go up and down completely randomly.
Pair Corralation between Via Renewables and Stepstone
Assuming the 90 days horizon Via Renewables is expected to generate 2.33 times less return on investment than Stepstone. In addition to that, Via Renewables is 1.39 times more volatile than Stepstone Group. It trades about 0.03 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.09 per unit of volatility. If you would invest 2,702 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 3,887 from holding Stepstone Group or generate 143.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Via Renewables vs. Stepstone Group
Performance |
| Timeline |
| Via Renewables |
| Stepstone Group |
Via Renewables and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Via Renewables and Stepstone
The main advantage of trading using opposite Via Renewables and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables 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.| Via Renewables vs. CMS Energy | Via Renewables vs. ACRES Commercial Realty | Via Renewables vs. Atlanticus Holdings Corp |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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