Correlation Between Vitru and Stepstone

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

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

Diversification Opportunities for Vitru and Stepstone

0.09

Correlation Coefficient

Vitru  Stepstone

Significant diversification

The 3 months correlation between Vitru and Stepstone is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vitru and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Vitru 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 Vitru are associated (or correlated) with Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Vitru i.e., Vitru and Stepstone go up and down completely randomly.

Pair Corralation between Vitru and Stepstone

If you would invest  1,650  in Vitru on September 28, 2024 and sell it today you would earn a total of  0.00  from holding Vitru or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Vitru  vs.  Stepstone Group

Vitru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vitru has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vitru is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Stepstone Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 3 (%) 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.

Pair Trading with Vitru and Stepstone

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

The idea behind Vitru and Stepstone Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.