Correlation Between IShares Trust and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Stone Ridge 2052, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Stone Ridge.
Diversification Opportunities for IShares Trust and Stone Ridge
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Stone is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Stone Ridge 2052 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2052 and IShares Trust 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 iShares Trust 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 2052 has no effect on the direction of IShares Trust i.e., IShares Trust and Stone Ridge go up and down completely randomly.
Pair Corralation between IShares Trust and Stone Ridge
Given the investment horizon of 90 days iShares Trust is expected to generate 0.69 times more return on investment than Stone Ridge. However, iShares Trust is 1.46 times less risky than Stone Ridge. It trades about 0.04 of its potential returns per unit of risk. Stone Ridge 2052 is currently generating about -0.23 per unit of risk. If you would invest 2,642 in iShares Trust on August 25, 2024 and sell it today you would earn a total of 69.00 from holding iShares Trust or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 22.27% |
| Values | Daily Returns |
iShares Trust vs. Stone Ridge 2052
Performance |
| Timeline |
| iShares Trust |
| Stone Ridge 2052 |
IShares Trust and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Stone Ridge
The main advantage of trading using opposite IShares Trust and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. Simplify Volatility Premium | IShares Trust vs. Tidal Trust II |
| Stone Ridge vs. Simplify Volatility Premium | Stone Ridge vs. Sprott Focus Trust | Stone Ridge vs. iShares Trust | Stone Ridge vs. iShares Trust |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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