Correlation Between NYSE Composite and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Stone Ridge High, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Stone Ridge.
Diversification Opportunities for NYSE Composite and Stone Ridge
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Stone is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Stone Ridge High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge High and NYSE Composite 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 NYSE Composite 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 High has no effect on the direction of NYSE Composite i.e., NYSE Composite and Stone Ridge go up and down completely randomly.
Pair Corralation between NYSE Composite and Stone Ridge
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.85 times more return on investment than Stone Ridge. However, NYSE Composite is 1.18 times less risky than Stone Ridge. It trades about 0.15 of its potential returns per unit of risk. Stone Ridge High is currently generating about 0.09 per unit of risk. If you would invest 1,906,443 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 115,502 from holding NYSE Composite or generate 6.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. Stone Ridge High
Performance |
Timeline |
NYSE Composite and Stone Ridge Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Stone Ridge High
Pair trading matchups for Stone Ridge
Pair Trading with NYSE Composite and Stone Ridge
The main advantage of trading using opposite NYSE Composite and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
Stone Ridge vs. Lifex Inflation Protected Income | Stone Ridge vs. Lifex Inflation Protected Income | Stone Ridge vs. Lifex Inflation Protected Income | Stone Ridge vs. Lifex Inflation Protected Income |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Transaction History View history of all your transactions and understand their impact on performance | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |