Correlation Between Stepstone and Alvarium Tiedemann

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Can any of the company-specific risk be diversified away by investing in both Stepstone and Alvarium Tiedemann 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 Stepstone and Alvarium Tiedemann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Alvarium Tiedemann Holdings, you can compare the effects of market volatilities on Stepstone and Alvarium Tiedemann 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 Stepstone with a short position of Alvarium Tiedemann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Alvarium Tiedemann.

Diversification Opportunities for Stepstone and Alvarium Tiedemann

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Stepstone and Alvarium is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Alvarium Tiedemann Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvarium Tiedemann and Stepstone 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 Stepstone Group are associated (or correlated) with Alvarium Tiedemann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvarium Tiedemann has no effect on the direction of Stepstone i.e., Stepstone and Alvarium Tiedemann go up and down completely randomly.

Pair Corralation between Stepstone and Alvarium Tiedemann

Given the investment horizon of 90 days Stepstone Group is expected to under-perform the Alvarium Tiedemann. But the stock apears to be less risky and, when comparing its historical volatility, Stepstone Group is 2.28 times less risky than Alvarium Tiedemann. The stock trades about -0.04 of its potential returns per unit of risk. The Alvarium Tiedemann Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  430.00  in Alvarium Tiedemann Holdings on September 17, 2024 and sell it today you would earn a total of  24.00  from holding Alvarium Tiedemann Holdings or generate 5.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Stepstone Group  vs.  Alvarium Tiedemann Holdings

 Performance 
       Timeline  
Stepstone Group 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Stepstone reported solid returns over the last few months and may actually be approaching a breakup point.
Alvarium Tiedemann 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Alvarium Tiedemann Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Alvarium Tiedemann is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Stepstone and Alvarium Tiedemann Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stepstone and Alvarium Tiedemann

The main advantage of trading using opposite Stepstone and Alvarium Tiedemann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Alvarium Tiedemann 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 Alvarium Tiedemann will offset losses from the drop in Alvarium Tiedemann's long position.
The idea behind Stepstone Group and Alvarium Tiedemann Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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