Correlation Between Sweetgreen and Stepstone

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

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

Diversification Opportunities for Sweetgreen and Stepstone

0.53

Correlation Coefficient

Sweetgreen  Stepstone

Very weak diversification

The 3 months correlation between Sweetgreen and Stepstone is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Sweetgreen 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 Sweetgreen 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 Sweetgreen i.e., Sweetgreen and Stepstone go up and down completely randomly.

Pair Corralation between Sweetgreen and Stepstone

Allowing for the 90-day total investment horizon Sweetgreen is expected to under-perform the Stepstone. In addition to that, Sweetgreen is 1.85 times more volatile than Stepstone Group. It trades about -0.23 of its total potential returns per unit of risk. Stepstone Group is currently generating about -0.27 per unit of volatility. If you would invest  6,645  in Stepstone Group on September 24, 2024 and sell it today you would lose (833.00) from holding Stepstone Group or give up 12.54% of portfolio value over 90 days.

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

Sweetgreen  vs.  Stepstone Group

Sweetgreen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sweetgreen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Stepstone Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Stepstone is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sweetgreen and Stepstone

The main advantage of trading using opposite Sweetgreen and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen 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 Sweetgreen 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.