Correlation Between Stepstone and CAMDEN

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

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

Diversification Opportunities for Stepstone and CAMDEN

-0.35

Correlation Coefficient

Stepstone  CAMDEN

Very good diversification

The 3 months correlation between Stepstone and CAMDEN is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and CAMDEN PPTY TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAMDEN PPTY TR 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 CAMDEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAMDEN PPTY TR has no effect on the direction of Stepstone i.e., Stepstone and CAMDEN go up and down completely randomly.

Pair Corralation between Stepstone and CAMDEN

Given the investment horizon of 90 days Stepstone Group is expected to generate 5.78 times more return on investment than CAMDEN. However, Stepstone is 5.78 times more volatile than CAMDEN PPTY TR. It trades about 0.16 of its potential returns per unit of risk. CAMDEN PPTY TR is currently generating about 0.01 per unit of risk. If you would invest  2,499  in Stepstone Group on September 28, 2024 and sell it today you would earn a total of  3,594  from holding Stepstone Group or generate 143.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.99%
Values	Daily Returns

Stepstone Group  vs.  CAMDEN PPTY TR

Stepstone Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Stepstone may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CAMDEN PPTY TR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAMDEN PPTY TR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAMDEN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stepstone and CAMDEN

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

The idea behind Stepstone Group and CAMDEN PPTY TR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.