Correlation Between Stone Ridge and Nationwide Bny
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Nationwide Bny 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 Bny 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 Bny Mellon, you can compare the effects of market volatilities on Stone Ridge and Nationwide Bny 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 Bny. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Nationwide Bny.
Diversification Opportunities for Stone Ridge and Nationwide Bny
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stone and Nationwide is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Nationwide Bny Mellon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bny Mellon 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 Bny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bny Mellon has no effect on the direction of Stone Ridge i.e., Stone Ridge and Nationwide Bny go up and down completely randomly.
Pair Corralation between Stone Ridge and Nationwide Bny
Assuming the 90 days horizon Stone Ridge Diversified is expected to generate 0.33 times more return on investment than Nationwide Bny. However, Stone Ridge Diversified is 3.05 times less risky than Nationwide Bny. It trades about 0.24 of its potential returns per unit of risk. Nationwide Bny Mellon is currently generating about -0.13 per unit of risk. If you would invest 1,132 in Stone Ridge Diversified on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Stone Ridge Diversified or generate 0.88% 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 Bny Mellon
Performance |
| Timeline |
| Stone Ridge Diversified |
| Nationwide Bny Mellon |
Stone Ridge and Nationwide Bny Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Nationwide Bny
The main advantage of trading using opposite Stone Ridge and Nationwide Bny positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Nationwide Bny 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 Bny will offset losses from the drop in Nationwide Bny's long position.| Stone Ridge vs. Barings Global Floating | Stone Ridge vs. Legg Mason Global | Stone Ridge vs. Siit Global Managed | Stone Ridge vs. Ab Global Risk |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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