Correlation Between Stone Ridge and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Lifex Inflation-protec 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 Lifex Inflation-protec 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 Lifex Inflation Protected Income, you can compare the effects of market volatilities on Stone Ridge and Lifex Inflation-protec 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 Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Lifex Inflation-protec.
Diversification Opportunities for Stone Ridge and Lifex Inflation-protec
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stone and Lifex is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec 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 Lifex Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of Stone Ridge i.e., Stone Ridge and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between Stone Ridge and Lifex Inflation-protec
Assuming the 90 days horizon Stone Ridge Diversified is expected to generate 0.42 times more return on investment than Lifex Inflation-protec. However, Stone Ridge Diversified is 2.39 times less risky than Lifex Inflation-protec. It trades about 0.26 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.06 per unit of risk. If you would invest 879.00 in Stone Ridge Diversified on August 30, 2024 and sell it today you would earn a total of 253.00 from holding Stone Ridge Diversified or generate 28.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 44.24% |
| Values | Daily Returns |
Stone Ridge Diversified vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| Stone Ridge Diversified |
| Lifex Inflation-protec |
Stone Ridge and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Lifex Inflation-protec
The main advantage of trading using opposite Stone Ridge and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Lifex Inflation-protec 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 Lifex Inflation-protec will offset losses from the drop in Lifex Inflation-protec's long position.| Stone Ridge vs. Mutual Of America | Stone Ridge vs. Fpa Queens Road | Stone Ridge vs. Lord Abbett Small | Stone Ridge vs. Ab Discovery Value |
| Lifex Inflation-protec vs. Queens Road Small | Lifex Inflation-protec vs. Ab Discovery Value | Lifex Inflation-protec vs. Mid Cap Growth Profund | Lifex Inflation-protec vs. Columbia Small Cap |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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