Correlation Between Carlyle and Stepstone

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

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

Diversification Opportunities for Carlyle and Stepstone

0.9

Correlation Coefficient

Carlyle  Stepstone

Almost no diversification

The 3 months correlation between Carlyle and Stepstone is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Carlyle 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 Carlyle Group 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 Carlyle i.e., Carlyle and Stepstone go up and down completely randomly.

Pair Corralation between Carlyle and Stepstone

Allowing for the 90-day total investment horizon Carlyle Group is expected to under-perform the Stepstone. But the stock apears to be less risky and, when comparing its historical volatility, Carlyle Group is 1.08 times less risky than Stepstone. The stock trades about -0.08 of its potential returns per unit of risk. The Stepstone Group is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  5,833  in Stepstone Group on December 29, 2024 and sell it today you would lose (653.00) from holding Stepstone Group or give up 11.19% of portfolio value over 90 days.

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

Carlyle Group  vs.  Stepstone Group

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Stepstone Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stepstone Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Carlyle and Stepstone

The main advantage of trading using opposite Carlyle and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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 Carlyle Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.