Correlation Between Stepstone and Dell Technologies

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

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

Diversification Opportunities for Stepstone and Dell Technologies

0.59

Correlation Coefficient

Stepstone  Dell Technologies

Very weak diversification

The 3 months correlation between Stepstone and Dell is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies 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 Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Stepstone i.e., Stepstone and Dell Technologies go up and down completely randomly.

Pair Corralation between Stepstone and Dell Technologies

Given the investment horizon of 90 days Stepstone Group is expected to generate 0.94 times more return on investment than Dell Technologies. However, Stepstone Group is 1.06 times less risky than Dell Technologies. It trades about -0.05 of its potential returns per unit of risk. Dell Technologies is currently generating about -0.1 per unit of risk. If you would invest  5,833  in Stepstone Group on December 30, 2024 and sell it today you would lose (653.00) from holding Stepstone Group or give up 11.19% of portfolio value over 90 days.

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

Stepstone Group  vs.  Dell Technologies

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.

Dell Technologies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Stepstone and Dell Technologies

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

The idea behind Stepstone Group and Dell Technologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.