Correlation Between Morpho and STEPN

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

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

Diversification Opportunities for Morpho and STEPN

0.23

Correlation Coefficient

Morpho  STEPN

Modest diversification

The 3 months correlation between Morpho and STEPN is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Morpho and STEPN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEPN and Morpho 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 Morpho are associated (or correlated) with STEPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEPN has no effect on the direction of Morpho i.e., Morpho and STEPN go up and down completely randomly.

Pair Corralation between Morpho and STEPN

Assuming the 90 days trading horizon Morpho is expected to generate 1.53 times more return on investment than STEPN. However, Morpho is 1.53 times more volatile than STEPN. It trades about 0.18 of its potential returns per unit of risk. STEPN is currently generating about -0.02 per unit of risk. If you would invest  101.00  in Morpho on April 20, 2025 and sell it today you would earn a total of  103.00  from holding Morpho or generate 101.98% return on investment over 90 days.

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

Morpho  vs.  STEPN

Morpho

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morpho are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Morpho sustained solid returns over the last few months and may actually be approaching a breakup point.

STEPN

Risk-Adjusted Performance

Very Weak

Over the last 90 days STEPN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for STEPN shareholders.

Pair Trading with Morpho and STEPN

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

The idea behind Morpho and STEPN 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 Global Correlations module to find global opportunities by holding instruments from different markets.