Correlation Between Stepstone and Munivest Fund

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

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

Diversification Opportunities for Stepstone and Munivest Fund

0.28

Correlation Coefficient

Stepstone  Munivest Fund

Modest diversification

The 3 months correlation between Stepstone and Munivest is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Munivest Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munivest Fund 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 Munivest Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munivest Fund has no effect on the direction of Stepstone i.e., Stepstone and Munivest Fund go up and down completely randomly.

Pair Corralation between Stepstone and Munivest Fund

Given the investment horizon of 90 days Stepstone Group is expected to under-perform the Munivest Fund. In addition to that, Stepstone is 3.98 times more volatile than Munivest Fund. It trades about -0.05 of its total potential returns per unit of risk. Munivest Fund is currently generating about 0.04 per unit of volatility. If you would invest  691.00  in Munivest Fund on December 30, 2024 and sell it today you would earn a total of  12.00  from holding Munivest Fund or generate 1.74% return on investment over 90 days.

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

Stepstone Group  vs.  Munivest Fund

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.

Munivest Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Munivest Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Stepstone and Munivest Fund

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

The idea behind Stepstone Group and Munivest Fund 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.