Correlation Between Us Government and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Stone Ridge Diversified, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Stone Ridge.
Diversification Opportunities for Us Government and Stone Ridge
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RGVCX and Stone is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us Government 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 Us Government Securities 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 Us Government i.e., Us Government and Stone Ridge go up and down completely randomly.
Pair Corralation between Us Government and Stone Ridge
Assuming the 90 days horizon Us Government is expected to generate 9.83 times less return on investment than Stone Ridge. In addition to that, Us Government is 2.18 times more volatile than Stone Ridge Diversified. It trades about 0.01 of its total potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.25 per unit of volatility. If you would invest 883.00 in Stone Ridge Diversified on September 4, 2024 and sell it today you would earn a total of 253.00 from holding Stone Ridge Diversified or generate 28.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Stone Ridge Diversified
Performance |
| Timeline |
| Us Government Securities |
| Stone Ridge Diversified |
Us Government and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Stone Ridge
The main advantage of trading using opposite Us Government and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Vanguard Small Cap Value | Us Government vs. Boston Partners Small | Us Government vs. Mutual Of America | Us Government vs. Ultramid Cap Profund Ultramid Cap |
| Stone Ridge vs. Us Government Securities | Stone Ridge vs. Us Government Securities | Stone Ridge vs. Us Government Securities | Stone Ridge vs. Prudential Government 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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