Correlation Between Stepstone and JPMORGAN

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

By analyzing existing cross correlation between Stepstone Group and JPMORGAN CHASE 5625, you can compare the effects of market volatilities on Stepstone and JPMORGAN 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 Stepstone with a short position of JPMORGAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and JPMORGAN.

Diversification Opportunities for Stepstone and JPMORGAN

-0.56

Correlation Coefficient

Stepstone  JPMORGAN

Excellent diversification

The 3 months correlation between Stepstone and JPMORGAN is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and JPMORGAN CHASE 5625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMORGAN CHASE 5625 and Stepstone 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 Stepstone Group are associated (or correlated) with JPMORGAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMORGAN CHASE 5625 has no effect on the direction of Stepstone i.e., Stepstone and JPMORGAN go up and down completely randomly.

Pair Corralation between Stepstone and JPMORGAN

Given the investment horizon of 90 days Stepstone Group is expected to generate 1.14 times more return on investment than JPMORGAN. However, Stepstone is 1.14 times more volatile than JPMORGAN CHASE 5625. It trades about 0.14 of its potential returns per unit of risk. JPMORGAN CHASE 5625 is currently generating about -0.04 per unit of risk. If you would invest  5,163  in Stepstone Group on September 13, 2024 and sell it today you would earn a total of  1,033  from holding Stepstone Group or generate 20.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Stepstone Group  vs.  JPMORGAN CHASE 5625

Stepstone Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Stepstone reported solid returns over the last few months and may actually be approaching a breakup point.

JPMORGAN CHASE 5625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMORGAN CHASE 5625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JPMORGAN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stepstone and JPMORGAN

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

The idea behind Stepstone Group and JPMORGAN CHASE 5625 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.