Correlation Between Blackstone Alternative and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Blackstone Alternative and Stone Ridge 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 Blackstone Alternative and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackstone Alternative Multi Strategy and Stone Ridge Diversified, you can compare the effects of market volatilities on Blackstone Alternative and Stone Ridge 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 Blackstone Alternative with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackstone Alternative and Stone Ridge.
Diversification Opportunities for Blackstone Alternative and Stone Ridge
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Blackstone and Stone is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Alternative Multi S and Stone Ridge Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge Diversified and Blackstone Alternative 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 Blackstone Alternative Multi Strategy are associated (or correlated) with Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge Diversified has no effect on the direction of Blackstone Alternative i.e., Blackstone Alternative and Stone Ridge go up and down completely randomly.
Pair Corralation between Blackstone Alternative and Stone Ridge
Assuming the 90 days horizon Blackstone Alternative is expected to generate 1.64 times less return on investment than Stone Ridge. But when comparing it to its historical volatility, Blackstone Alternative Multi Strategy is 1.15 times less risky than Stone Ridge. It trades about 0.18 of its potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 878.00 in Stone Ridge Diversified on August 30, 2024 and sell it today you would earn a total of 246.00 from holding Stone Ridge Diversified or generate 28.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackstone Alternative Multi S vs. Stone Ridge Diversified
Performance |
| Timeline |
| Blackstone Alternative |
| Stone Ridge Diversified |
Blackstone Alternative and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackstone Alternative and Stone Ridge
The main advantage of trading using opposite Blackstone Alternative and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackstone Alternative position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.The idea behind Blackstone Alternative Multi Strategy and Stone Ridge Diversified 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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Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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