Correlation Between Stone Ridge and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Mid Cap 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 Mid Cap 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 Mid Cap 15x Strategy, you can compare the effects of market volatilities on Stone Ridge and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Mid Cap.
Diversification Opportunities for Stone Ridge and Mid Cap
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stone and Mid is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Mid Cap 15x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap 15x 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap 15x has no effect on the direction of Stone Ridge i.e., Stone Ridge and Mid Cap go up and down completely randomly.
Pair Corralation between Stone Ridge and Mid Cap
Assuming the 90 days horizon Stone Ridge Diversified is expected to generate about the same return on investment as Mid Cap 15x Strategy. But, Stone Ridge Diversified is 6.76 times less risky than Mid Cap. It trades about 0.24 of its potential returns per unit of risk. Mid Cap 15x Strategy is currently generating about 0.04 per unit of risk. If you would invest 11,551 in Mid Cap 15x Strategy on September 13, 2024 and sell it today you would earn a total of 86.00 from holding Mid Cap 15x Strategy or generate 0.74% 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. Mid Cap 15x Strategy
Performance |
| Timeline |
| Stone Ridge Diversified |
| Mid Cap 15x |
Stone Ridge and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Mid Cap
The main advantage of trading using opposite Stone Ridge and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap'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 |
| Mid Cap vs. Blackrock Conservative Prprdptfinstttnl | Mid Cap vs. Stone Ridge Diversified | Mid Cap vs. Tax Free Conservative Income | Mid Cap vs. Delaware Limited Term Diversified |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stocks Directory Find actively traded stocks across global markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |