Correlation Between STEPN and Fantom

Can any of the company-specific risk be diversified away by investing in both STEPN and Fantom 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 STEPN and Fantom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between STEPN and Fantom, you can compare the effects of market volatilities on STEPN and Fantom 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 STEPN with a short position of Fantom. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEPN and Fantom.

Diversification Opportunities for STEPN and Fantom

0.76

Correlation Coefficient

STEPN  Fantom

Poor diversification

The 3 months correlation between STEPN and Fantom is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding STEPN and Fantom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fantom and STEPN 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 STEPN are associated (or correlated) with Fantom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fantom has no effect on the direction of STEPN i.e., STEPN and Fantom go up and down completely randomly.

Pair Corralation between STEPN and Fantom

Assuming the 90 days trading horizon STEPN is expected to generate 1.27 times less return on investment than Fantom. In addition to that, STEPN is 1.0 times more volatile than Fantom. It trades about 0.18 of its total potential returns per unit of risk. Fantom is currently generating about 0.23 per unit of volatility. If you would invest  39.00  in Fantom on September 2, 2024 and sell it today you would earn a total of  66.00  from holding Fantom or generate 169.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

STEPN  vs.  Fantom

STEPN

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STEPN are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, STEPN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fantom

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fantom are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Fantom exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STEPN and Fantom

The main advantage of trading using opposite STEPN and Fantom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEPN position performs unexpectedly, Fantom 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 Fantom will offset losses from the drop in Fantom's long position.

The idea behind STEPN and Fantom 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.