Correlation Between Stone Ridge and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Stone Ridge 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 Stone Ridge and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Ridge High and Stone Ridge Diversified, you can compare the effects of market volatilities on Stone Ridge 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 Stone Ridge with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Stone Ridge.
Diversification Opportunities for Stone Ridge and Stone Ridge
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STONE and Stone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge High 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 Stone Ridge 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 Ridge High 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 Stone Ridge i.e., Stone Ridge and Stone Ridge go up and down completely randomly.
Pair Corralation between Stone Ridge and Stone Ridge
Assuming the 90 days horizon Stone Ridge High is expected to generate 0.37 times more return on investment than Stone Ridge. However, Stone Ridge High is 2.68 times less risky than Stone Ridge. It trades about 1.01 of its potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.05 per unit of risk. If you would invest 928.00 in Stone Ridge High on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Stone Ridge High or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stone Ridge High vs. Stone Ridge Diversified
Performance |
| Timeline |
| Stone Ridge High |
| Stone Ridge Diversified |
Stone Ridge and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Stone Ridge
The main advantage of trading using opposite Stone Ridge and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge 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.| Stone Ridge vs. Strategic Allocation Aggressive | Stone Ridge vs. Aqr Risk Balanced Modities | Stone Ridge vs. Franklin High Income | Stone Ridge vs. California High Yield Municipal |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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