Correlation Between SPDR SP and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and Stone Ridge 2056, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Stone Ridge.
Diversification Opportunities for SPDR SP and Stone Ridge
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and Stone is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Stone Ridge 2056 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2056 and SPDR SP 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 SPDR SP 500 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 2056 has no effect on the direction of SPDR SP i.e., SPDR SP and Stone Ridge go up and down completely randomly.
Pair Corralation between SPDR SP and Stone Ridge
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.35 times more return on investment than Stone Ridge. However, SPDR SP is 1.35 times more volatile than Stone Ridge 2056. It trades about 0.12 of its potential returns per unit of risk. Stone Ridge 2056 is currently generating about -0.15 per unit of risk. If you would invest 39,725 in SPDR SP 500 on September 1, 2024 and sell it today you would earn a total of 20,530 from holding SPDR SP 500 or generate 51.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 12.09% |
| Values | Daily Returns |
SPDR SP 500 vs. Stone Ridge 2056
Performance |
| Timeline |
| SPDR SP 500 |
| Stone Ridge 2056 |
SPDR SP and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Stone Ridge
The main advantage of trading using opposite SPDR SP and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class |
| Stone Ridge vs. Vanguard Total Stock | Stone Ridge vs. SPDR SP 500 | Stone Ridge vs. iShares Core SP | Stone Ridge vs. Vanguard Total Bond |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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