Correlation Between CVP and STEPN

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

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

Diversification Opportunities for CVP and STEPN

0.87

Correlation Coefficient

CVP  STEPN

Very poor diversification

The 3 months correlation between CVP and STEPN is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CVP and STEPN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEPN and CVP 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 CVP are associated (or correlated) with STEPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEPN has no effect on the direction of CVP i.e., CVP and STEPN go up and down completely randomly.

Pair Corralation between CVP and STEPN

Assuming the 90 days trading horizon CVP is expected to generate 3.96 times more return on investment than STEPN. However, CVP is 3.96 times more volatile than STEPN. It trades about -0.04 of its potential returns per unit of risk. STEPN is currently generating about -0.25 per unit of risk. If you would invest  88.00  in CVP on December 28, 2024 and sell it today you would lose (80.88) from holding CVP or give up 91.91% of portfolio value over 90 days.

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

CVP  vs.  STEPN

CVP

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for CVP shareholders.

STEPN

Risk-Adjusted Performance

Very Weak

Over the last 90 days STEPN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for STEPN shareholders.

Pair Trading with CVP and STEPN

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

The idea behind CVP and STEPN 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.