Correlation Between Stone Harbor and Russell 2000
Can any of the company-specific risk be diversified away by investing in both Stone Harbor and Russell 2000 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 Stone Harbor and Russell 2000 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Harbor Local and Russell 2000 2x, you can compare the effects of market volatilities on Stone Harbor and Russell 2000 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 Stone Harbor with a short position of Russell 2000. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Harbor and Russell 2000.
Diversification Opportunities for Stone Harbor and Russell 2000
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stone and Russell is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Stone Harbor Local and Russell 2000 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russell 2000 2x and Stone Harbor 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 Stone Harbor Local are associated (or correlated) with Russell 2000. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russell 2000 2x has no effect on the direction of Stone Harbor i.e., Stone Harbor and Russell 2000 go up and down completely randomly.
Pair Corralation between Stone Harbor and Russell 2000
Assuming the 90 days horizon Stone Harbor Local is expected to generate 0.19 times more return on investment than Russell 2000. However, Stone Harbor Local is 5.21 times less risky than Russell 2000. It trades about 0.02 of its potential returns per unit of risk. Russell 2000 2x is currently generating about -0.29 per unit of risk. If you would invest 811.00 in Stone Harbor Local on December 1, 2024 and sell it today you would earn a total of 1.00 from holding Stone Harbor Local or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Stone Harbor Local vs. Russell 2000 2x
Performance |
| Timeline |
| Stone Harbor Local |
| Russell 2000 2x |
Stone Harbor and Russell 2000 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Harbor and Russell 2000
The main advantage of trading using opposite Stone Harbor and Russell 2000 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Harbor position performs unexpectedly, Russell 2000 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 Russell 2000 will offset losses from the drop in Russell 2000's long position.| Stone Harbor vs. Stone Harbor Emerging | Stone Harbor vs. Stone Harbor Emerging | Stone Harbor vs. Emerging Markets Value | Stone Harbor vs. Mfs Blended Research |
| Russell 2000 vs. Amg Managers Centersquare | Russell 2000 vs. Prudential Real Estate | Russell 2000 vs. Voya Real Estate | Russell 2000 vs. Global Real Estate |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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