Correlation Between Lifex Inflation-protec and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Lifex Inflation-protec 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 Lifex Inflation-protec and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifex Inflation Protected Income and Stone Ridge Diversified, you can compare the effects of market volatilities on Lifex Inflation-protec 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 Lifex Inflation-protec with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifex Inflation-protec and Stone Ridge.
Diversification Opportunities for Lifex Inflation-protec and Stone Ridge
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lifex and Stone is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lifex Inflation Protected Inco 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 Lifex Inflation-protec 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 Lifex Inflation Protected Income 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 Lifex Inflation-protec i.e., Lifex Inflation-protec and Stone Ridge go up and down completely randomly.
Pair Corralation between Lifex Inflation-protec and Stone Ridge
Assuming the 90 days horizon Lifex Inflation-protec is expected to generate 1.18 times less return on investment than Stone Ridge. In addition to that, Lifex Inflation-protec is 1.38 times more volatile than Stone Ridge Diversified. It trades about 0.14 of its total potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.22 per unit of volatility. If you would invest 1,055 in Stone Ridge Diversified on September 1, 2024 and sell it today you would earn a total of 69.00 from holding Stone Ridge Diversified or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Lifex Inflation Protected Inco vs. Stone Ridge Diversified
Performance |
| Timeline |
| Lifex Inflation-protec |
| Stone Ridge Diversified |
Lifex Inflation-protec and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifex Inflation-protec and Stone Ridge
The main advantage of trading using opposite Lifex Inflation-protec and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifex Inflation-protec 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.| Lifex Inflation-protec vs. Ultra Short Fixed Income | Lifex Inflation-protec vs. Sarofim Equity | Lifex Inflation-protec vs. Small Cap Equity | Lifex Inflation-protec vs. Ms Global Fixed |
| Stone Ridge vs. Strategic Allocation Aggressive | Stone Ridge vs. Ab High Income | Stone Ridge vs. Western Asset High | Stone Ridge vs. T Rowe Price |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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