Correlation Between Munivest Fund and Stepstone

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

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

Diversification Opportunities for Munivest Fund and Stepstone

0.45

Correlation Coefficient

Munivest Fund  Stepstone

Very weak diversification

The 3 months correlation between Munivest and Stepstone is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Munivest Fund and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Munivest Fund 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 Munivest Fund 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 Munivest Fund i.e., Munivest Fund and Stepstone go up and down completely randomly.

Pair Corralation between Munivest Fund and Stepstone

Considering the 90-day investment horizon Munivest Fund is expected to generate 0.3 times more return on investment than Stepstone. However, Munivest Fund is 3.29 times less risky than Stepstone. It trades about -0.03 of its potential returns per unit of risk. Stepstone Group is currently generating about -0.07 per unit of risk. If you would invest  738.00  in Munivest Fund on November 29, 2024 and sell it today you would lose (11.00) from holding Munivest Fund or give up 1.49% of portfolio value over 90 days.

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

Munivest Fund  vs.  Stepstone Group

Munivest Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Munivest Fund has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the 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 Munivest Fund and Stepstone

The main advantage of trading using opposite Munivest Fund and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Munivest Fund 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 Munivest Fund 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.