Correlation Between Proshares Russell and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Proshares Russell 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 Proshares Russell and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proshares Russell 2000 and Stone Ridge 2054, you can compare the effects of market volatilities on Proshares Russell 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 Proshares Russell with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and Stone Ridge.
Diversification Opportunities for Proshares Russell and Stone Ridge
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Proshares and Stone is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and Stone Ridge 2054 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2054 and Proshares Russell 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 Proshares Russell 2000 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 2054 has no effect on the direction of Proshares Russell i.e., Proshares Russell and Stone Ridge go up and down completely randomly.
Pair Corralation between Proshares Russell and Stone Ridge
Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 1.96 times more return on investment than Stone Ridge. However, Proshares Russell is 1.96 times more volatile than Stone Ridge 2054. It trades about 0.19 of its potential returns per unit of risk. Stone Ridge 2054 is currently generating about -0.15 per unit of risk. If you would invest 3,913 in Proshares Russell 2000 on August 29, 2024 and sell it today you would earn a total of 481.00 from holding Proshares Russell 2000 or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.67% |
| Values | Daily Returns |
Proshares Russell 2000 vs. Stone Ridge 2054
Performance |
| Timeline |
| Proshares Russell 2000 |
| Stone Ridge 2054 |
Proshares Russell and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proshares Russell and Stone Ridge
The main advantage of trading using opposite Proshares Russell and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell 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.| Proshares Russell vs. Global X SP | Proshares Russell vs. Amplify CWP Enhanced | Proshares Russell vs. Global X Russell | Proshares Russell vs. JPMorgan Nasdaq Equity |
| Stone Ridge vs. Global X Funds | Stone Ridge vs. US Treasury 12 | Stone Ridge vs. Tidal Trust II | Stone Ridge vs. Franklin Liberty Treasury |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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