Correlation Between Nasdaq 100 and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Stone Ridge 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 Nasdaq 100 and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Stone Ridge Diversified, you can compare the effects of market volatilities on Nasdaq 100 and Stone Ridge 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 Nasdaq 100 with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Stone Ridge.
Diversification Opportunities for Nasdaq 100 and Stone Ridge
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq and Stone is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Stone Ridge Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge Diversified and Nasdaq 100 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 Nasdaq 100 Index Fund are associated (or correlated) with Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge Diversified has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Stone Ridge go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Stone Ridge
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 5.45 times more return on investment than Stone Ridge. However, Nasdaq 100 is 5.45 times more volatile than Stone Ridge Diversified. It trades about 0.1 of its potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.23 per unit of risk. If you would invest 3,110 in Nasdaq 100 Index Fund on November 1, 2024 and sell it today you would earn a total of 2,171 from holding Nasdaq 100 Index Fund or generate 69.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Stone Ridge Diversified
Performance |
| Timeline |
| Nasdaq 100 Index |
| Stone Ridge Diversified |
Nasdaq 100 and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Stone Ridge
The main advantage of trading using opposite Nasdaq 100 and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| Nasdaq 100 vs. Hartford Moderate Allocation | Nasdaq 100 vs. Alternative Asset Allocation | Nasdaq 100 vs. T Rowe Price | Nasdaq 100 vs. Dodge Cox Stock |
| Stone Ridge vs. Transamerica International Equity | Stone Ridge vs. Dreyfusstandish Global Fixed | Stone Ridge vs. Dws Equity Sector | Stone Ridge vs. T Rowe Price |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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