Correlation Between STEPN and Convex Finance

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

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

Diversification Opportunities for STEPN and Convex Finance

0.95

Correlation Coefficient

STEPN  Convex Finance

Almost no diversification

The 3 months correlation between STEPN and Convex is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding STEPN and Convex Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Convex Finance and STEPN 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 STEPN are associated (or correlated) with Convex Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Convex Finance has no effect on the direction of STEPN i.e., STEPN and Convex Finance go up and down completely randomly.

Pair Corralation between STEPN and Convex Finance

Assuming the 90 days trading horizon STEPN is expected to under-perform the Convex Finance. But the crypto coin apears to be less risky and, when comparing its historical volatility, STEPN is 1.3 times less risky than Convex Finance. The crypto coin trades about -0.27 of its potential returns per unit of risk. The Convex Finance is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  450.00  in Convex Finance on December 29, 2024 and sell it today you would lose (236.00) from holding Convex Finance or give up 52.44% of portfolio value over 90 days.

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

STEPN  vs.  Convex Finance

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.

Convex Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Convex Finance 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 Convex Finance shareholders.

Pair Trading with STEPN and Convex Finance

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

The idea behind STEPN and Convex Finance 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.