Correlation Between Stepstone and Integral

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

By analyzing existing cross correlation between Stepstone Group and Integral Ad Science, you can compare the effects of market volatilities on Stepstone and Integral 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 Integral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Integral.

Diversification Opportunities for Stepstone and Integral

0.22

Correlation Coefficient

Stepstone  Integral

Modest diversification

The 3 months correlation between Stepstone and Integral is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Integral Ad Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integral Ad Science 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 Integral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integral Ad Science has no effect on the direction of Stepstone i.e., Stepstone and Integral go up and down completely randomly.

Pair Corralation between Stepstone and Integral

Given the investment horizon of 90 days Stepstone Group is expected to generate 0.81 times more return on investment than Integral. However, Stepstone Group is 1.23 times less risky than Integral. It trades about 0.16 of its potential returns per unit of risk. Integral Ad Science is currently generating about -0.05 per unit of risk. If you would invest  5,274  in Stepstone Group on August 20, 2024 and sell it today you would earn a total of  1,226  from holding Stepstone Group or generate 23.25% return on investment over 90 days.

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

Stepstone Group  vs.  Integral Ad Science

Stepstone Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Stepstone reported solid returns over the last few months and may actually be approaching a breakup point.

Integral Ad Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integral Ad Science has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Stepstone and Integral

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

The idea behind Stepstone Group and Integral Ad Science 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 CEOs Directory module to screen CEOs from public companies around the world.