Correlation Between Stone Ridge and Columbia Capital
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Columbia Capital 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 Columbia Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Ridge Diversified and Columbia Capital Allocation, you can compare the effects of market volatilities on Stone Ridge and Columbia Capital 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 Columbia Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Columbia Capital.
Diversification Opportunities for Stone Ridge and Columbia Capital
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stone and Columbia is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Columbia Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Capital All 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 Diversified are associated (or correlated) with Columbia Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Capital All has no effect on the direction of Stone Ridge i.e., Stone Ridge and Columbia Capital go up and down completely randomly.
Pair Corralation between Stone Ridge and Columbia Capital
Assuming the 90 days horizon Stone Ridge Diversified is expected to generate 0.68 times more return on investment than Columbia Capital. However, Stone Ridge Diversified is 1.47 times less risky than Columbia Capital. It trades about 0.16 of its potential returns per unit of risk. Columbia Capital Allocation is currently generating about 0.08 per unit of risk. If you would invest 987.00 in Stone Ridge Diversified on November 21, 2024 and sell it today you would earn a total of 79.00 from holding Stone Ridge Diversified or generate 8.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Stone Ridge Diversified vs. Columbia Capital Allocation
Performance |
Timeline |
Stone Ridge Diversified |
Columbia Capital All |
Stone Ridge and Columbia Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stone Ridge and Columbia Capital
The main advantage of trading using opposite Stone Ridge and Columbia Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Columbia Capital 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 Columbia Capital will offset losses from the drop in Columbia Capital's long position.Stone Ridge vs. Putnam Global Financials | ||
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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