Correlation Between Stone Ridge and Wilmington Diversified
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Wilmington Diversified 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 Wilmington Diversified 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 Wilmington Diversified Income, you can compare the effects of market volatilities on Stone Ridge and Wilmington Diversified 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 Wilmington Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Wilmington Diversified.
Diversification Opportunities for Stone Ridge and Wilmington Diversified
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stone and Wilmington is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Wilmington Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Diversified 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 Wilmington Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Diversified has no effect on the direction of Stone Ridge i.e., Stone Ridge and Wilmington Diversified go up and down completely randomly.
Pair Corralation between Stone Ridge and Wilmington Diversified
Assuming the 90 days horizon Stone Ridge is expected to generate 8.1 times less return on investment than Wilmington Diversified. But when comparing it to its historical volatility, Stone Ridge Diversified is 3.32 times less risky than Wilmington Diversified. It trades about 0.13 of its potential returns per unit of risk. Wilmington Diversified Income is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,324 in Wilmington Diversified Income on October 22, 2024 and sell it today you would earn a total of 41.00 from holding Wilmington Diversified Income or generate 3.1% 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. Wilmington Diversified Income
Performance |
| Timeline |
| Stone Ridge Diversified |
| Wilmington Diversified |
Stone Ridge and Wilmington Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Wilmington Diversified
The main advantage of trading using opposite Stone Ridge and Wilmington Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Wilmington Diversified 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 Wilmington Diversified will offset losses from the drop in Wilmington Diversified's long position.| Stone Ridge vs. Virtus Multi Sector Short | Stone Ridge vs. Delaware Investments Ultrashort | Stone Ridge vs. Transamerica Short Term Bond | Stone Ridge vs. Oakhurst Short Duration |
| Wilmington Diversified vs. Americafirst Monthly Risk On | Wilmington Diversified vs. Gmo High Yield | Wilmington Diversified vs. Ab High Income | Wilmington Diversified vs. Barings High Yield |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |