Correlation Between Zedge and Stepstone
Can any of the company-specific risk be diversified away by investing in both Zedge 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 Zedge and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zedge Inc and Stepstone Group, you can compare the effects of market volatilities on Zedge 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 Zedge with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zedge and Stepstone.
Diversification Opportunities for Zedge and Stepstone
Excellent diversification
The 3 months correlation between Zedge and Stepstone is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Zedge Inc and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Zedge 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 Zedge 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 Zedge i.e., Zedge and Stepstone go up and down completely randomly.
Pair Corralation between Zedge and Stepstone
Given the investment horizon of 90 days Zedge is expected to generate 2.43 times less return on investment than Stepstone. In addition to that, Zedge is 2.03 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 0.17 per unit of volatility. If you would invest 3,578 in Stepstone Group on September 3, 2024 and sell it today you would earn a total of 3,011 from holding Stepstone Group or generate 84.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zedge Inc vs. Stepstone Group
Performance |
| Timeline |
| Zedge Inc |
| Stepstone Group |
Zedge and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zedge and Stepstone
The main advantage of trading using opposite Zedge and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zedge 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.The idea behind Zedge Inc and Stepstone Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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