Correlation Between Logan Ridge and Stepstone

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

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

Diversification Opportunities for Logan Ridge and Stepstone

0.58

Correlation Coefficient

Logan Ridge  Stepstone

Very weak diversification

The 3 months correlation between Logan and Stepstone is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Logan Ridge 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 Logan Ridge Finance 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 Logan Ridge i.e., Logan Ridge and Stepstone go up and down completely randomly.

Pair Corralation between Logan Ridge and Stepstone

Given the investment horizon of 90 days Logan Ridge is expected to generate 1.08 times less return on investment than Stepstone. But when comparing it to its historical volatility, Logan Ridge Finance is 2.04 times less risky than Stepstone. It trades about 0.06 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,630  in Stepstone Group on September 23, 2024 and sell it today you would earn a total of  182.00  from holding Stepstone Group or generate 3.23% return on investment over 90 days.

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

Logan Ridge Finance  vs.  Stepstone Group

Logan Ridge Finance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Logan Ridge is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Stepstone Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Stepstone is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Logan Ridge and Stepstone

The main advantage of trading using opposite Logan Ridge and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logan Ridge 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 Logan Ridge Finance 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..