Correlation Between Balanced Strategy and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Balanced Strategy 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 Balanced Strategy and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Strategy Fund and Stone Ridge Diversified, you can compare the effects of market volatilities on Balanced Strategy 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 Balanced Strategy with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Strategy and Stone Ridge.
Diversification Opportunities for Balanced Strategy and Stone Ridge
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Balanced and Stone is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund 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 Balanced Strategy 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 Balanced Strategy Fund 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 Balanced Strategy i.e., Balanced Strategy and Stone Ridge go up and down completely randomly.
Pair Corralation between Balanced Strategy and Stone Ridge
Assuming the 90 days horizon Balanced Strategy Fund is expected to under-perform the Stone Ridge. In addition to that, Balanced Strategy is 3.04 times more volatile than Stone Ridge Diversified. It trades about -0.17 of its total potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.28 per unit of volatility. If you would invest 1,055 in Stone Ridge Diversified on October 10, 2024 and sell it today you would earn a total of 13.00 from holding Stone Ridge Diversified or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Strategy Fund vs. Stone Ridge Diversified
Performance |
| Timeline |
| Balanced Strategy |
| Stone Ridge Diversified |
Balanced Strategy and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Strategy and Stone Ridge
The main advantage of trading using opposite Balanced Strategy and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Strategy 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.| Balanced Strategy vs. Fidelity Small Cap | Balanced Strategy vs. Great West Loomis Sayles | Balanced Strategy vs. Vanguard Small Cap Value | Balanced Strategy vs. Amg River Road |
| Stone Ridge vs. T Rowe Price | Stone Ridge vs. Mairs Power Growth | Stone Ridge vs. Mid Cap Growth | Stone Ridge vs. Morningstar Aggressive Growth |
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.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |