Correlation Between Stepan and MASSMU

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

By analyzing existing cross correlation between Stepan Company and MASSMU 5077 15 FEB 69, you can compare the effects of market volatilities on Stepan and MASSMU 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 Stepan with a short position of MASSMU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and MASSMU.

Diversification Opportunities for Stepan and MASSMU

-0.01

Correlation Coefficient

Stepan  MASSMU

Good diversification

The 3 months correlation between Stepan and MASSMU is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and MASSMU 5077 15 FEB 69 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSMU 5077 15 and Stepan 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 Stepan Company are associated (or correlated) with MASSMU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSMU 5077 15 has no effect on the direction of Stepan i.e., Stepan and MASSMU go up and down completely randomly.

Pair Corralation between Stepan and MASSMU

Considering the 90-day investment horizon Stepan Company is expected to under-perform the MASSMU. In addition to that, Stepan is 1.19 times more volatile than MASSMU 5077 15 FEB 69. It trades about -0.08 of its total potential returns per unit of risk. MASSMU 5077 15 FEB 69 is currently generating about 0.07 per unit of volatility. If you would invest  8,673  in MASSMU 5077 15 FEB 69 on September 26, 2024 and sell it today you would earn a total of  263.00  from holding MASSMU 5077 15 FEB 69 or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.6%
Values	Daily Returns

Stepan Company  vs.  MASSMU 5077 15 FEB 69

Stepan Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stepan Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

MASSMU 5077 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MASSMU 5077 15 FEB 69 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for MASSMU 5077 15 FEB 69 investors.

Pair Trading with Stepan and MASSMU

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

The idea behind Stepan Company and MASSMU 5077 15 FEB 69 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .