Correlation Between Stone Ridge and Nationwide Growth
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Nationwide Growth 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 Nationwide Growth 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 Nationwide Growth Fund, you can compare the effects of market volatilities on Stone Ridge and Nationwide Growth 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 Nationwide Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Nationwide Growth.
Diversification Opportunities for Stone Ridge and Nationwide Growth
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stone and Nationwide is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Nationwide Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Growth 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 Nationwide Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Growth has no effect on the direction of Stone Ridge i.e., Stone Ridge and Nationwide Growth go up and down completely randomly.
Pair Corralation between Stone Ridge and Nationwide Growth
Assuming the 90 days horizon Stone Ridge is expected to generate 16.34 times less return on investment than Nationwide Growth. But when comparing it to its historical volatility, Stone Ridge Diversified is 3.34 times less risky than Nationwide Growth. It trades about 0.08 of its potential returns per unit of risk. Nationwide Growth Fund is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,480 in Nationwide Growth Fund on September 4, 2024 and sell it today you would earn a total of 88.00 from holding Nationwide Growth Fund or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stone Ridge Diversified vs. Nationwide Growth Fund
Performance |
| Timeline |
| Stone Ridge Diversified |
| Nationwide Growth |
Stone Ridge and Nationwide Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Nationwide Growth
The main advantage of trading using opposite Stone Ridge and Nationwide Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Nationwide Growth 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 Nationwide Growth will offset losses from the drop in Nationwide Growth's long position.| Stone Ridge vs. Us Government Securities | Stone Ridge vs. Us Government Securities | Stone Ridge vs. Us Government Securities | Stone Ridge vs. Prudential Government Income |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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