Correlation Between Stone Ridge and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Mesirow Financial 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 Mesirow Financial 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 Mesirow Financial Small, you can compare the effects of market volatilities on Stone Ridge and Mesirow Financial 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 Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Mesirow Financial.
Diversification Opportunities for Stone Ridge and Mesirow Financial
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stone and Mesirow is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small 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 Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Stone Ridge i.e., Stone Ridge and Mesirow Financial go up and down completely randomly.
Pair Corralation between Stone Ridge and Mesirow Financial
Assuming the 90 days horizon Stone Ridge Diversified is expected to under-perform the Mesirow Financial. But the mutual fund apears to be less risky and, when comparing its historical volatility, Stone Ridge Diversified is 5.49 times less risky than Mesirow Financial. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Mesirow Financial Small is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,245 in Mesirow Financial Small on November 2, 2024 and sell it today you would earn a total of 67.00 from holding Mesirow Financial Small or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stone Ridge Diversified vs. Mesirow Financial Small
Performance |
| Timeline |
| Stone Ridge Diversified |
| Mesirow Financial Small |
Stone Ridge and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Mesirow Financial
The main advantage of trading using opposite Stone Ridge and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Mesirow Financial 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 Mesirow Financial will offset losses from the drop in Mesirow Financial's long position.| Stone Ridge vs. Gmo Global Equity | Stone Ridge vs. Calvert International Equity | Stone Ridge vs. T Rowe Price | Stone Ridge vs. Us Vector Equity |
| Mesirow Financial vs. Mesirow Financial Small | Mesirow Financial vs. Mesirow Enhanced Core | Mesirow Financial vs. Mesirow Financial High | Mesirow Financial vs. Mesirow Financial High |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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