Correlation Between Ziff Davis and Stepan
Can any of the company-specific risk be diversified away by investing in both Ziff Davis and Stepan 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 Ziff Davis and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ziff Davis and Stepan Company, you can compare the effects of market volatilities on Ziff Davis and Stepan 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 Ziff Davis with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ziff Davis and Stepan.
Diversification Opportunities for Ziff Davis and Stepan
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ziff and Stepan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ziff Davis and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Ziff Davis 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 Ziff Davis are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Ziff Davis i.e., Ziff Davis and Stepan go up and down completely randomly.
Pair Corralation between Ziff Davis and Stepan
Allowing for the 90-day total investment horizon Ziff Davis is expected to under-perform the Stepan. In addition to that, Ziff Davis is 1.18 times more volatile than Stepan Company. It trades about -0.02 of its total potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of volatility. If you would invest 10,782 in Stepan Company on September 3, 2024 and sell it today you would lose (3,080) from holding Stepan Company or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ziff Davis vs. Stepan Company
Performance |
| Timeline |
| Ziff Davis |
| Stepan Company |
Ziff Davis and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ziff Davis and Stepan
The main advantage of trading using opposite Ziff Davis and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ziff Davis position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Ziff Davis vs. Interpublic Group of | Ziff Davis vs. Criteo Sa | Ziff Davis vs. WPP PLC ADR | Ziff Davis vs. Integral Ad Science |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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