Correlation Between Stone Ridge and Mutual Of
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Mutual Of 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 Mutual Of 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 Mutual Of America, you can compare the effects of market volatilities on Stone Ridge and Mutual Of 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 Mutual Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Mutual Of.
Diversification Opportunities for Stone Ridge and Mutual Of
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stone and Mutual is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Mutual Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Of America 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 Mutual Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Of America has no effect on the direction of Stone Ridge i.e., Stone Ridge and Mutual Of go up and down completely randomly.
Pair Corralation between Stone Ridge and Mutual Of
Assuming the 90 days horizon Stone Ridge is expected to generate 38.24 times less return on investment than Mutual Of. But when comparing it to its historical volatility, Stone Ridge Diversified is 8.57 times less risky than Mutual Of. It trades about 0.06 of its potential returns per unit of risk. Mutual Of America is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,493 in Mutual Of America on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Mutual Of America or generate 10.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Stone Ridge Diversified vs. Mutual Of America
Performance |
| Timeline |
| Stone Ridge Diversified |
| Mutual Of America |
Stone Ridge and Mutual Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Mutual Of
The main advantage of trading using opposite Stone Ridge and Mutual Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Mutual Of 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 Mutual Of will offset losses from the drop in Mutual Of's long position.| Stone Ridge vs. T Rowe Price | Stone Ridge vs. Nationwide Growth Fund | Stone Ridge vs. Ab Small Cap | Stone Ridge vs. Kinetics Small Cap |
| Mutual Of vs. Gamco Global Telecommunications | Mutual Of vs. Bbh Intermediate Municipal | Mutual Of vs. Alliancebernstein National Municipal | Mutual Of vs. T Rowe Price |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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