Correlation Between Stepstone and Sweetgreen

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

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

Diversification Opportunities for Stepstone and Sweetgreen

0.53

Correlation Coefficient

Stepstone  Sweetgreen

Very weak diversification

The 3 months correlation between Stepstone and Sweetgreen is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of Stepstone i.e., Stepstone and Sweetgreen go up and down completely randomly.

Pair Corralation between Stepstone and Sweetgreen

Given the investment horizon of 90 days Stepstone is expected to generate 1.26 times less return on investment than Sweetgreen. But when comparing it to its historical volatility, Stepstone Group is 2.29 times less risky than Sweetgreen. It trades about 0.1 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,852  in Sweetgreen on September 24, 2024 and sell it today you would earn a total of  658.00  from holding Sweetgreen or generate 23.07% return on investment over 90 days.

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

Stepstone Group  vs.  Sweetgreen

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.

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.

Pair Trading with Stepstone and Sweetgreen

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

The idea behind Stepstone Group and Sweetgreen 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.