Correlation Between Calvert Conservative and Stone Ridge

Can any of the company-specific risk be diversified away by investing in both Calvert Conservative 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 Calvert Conservative and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calvert Conservative Allocation and Stone Ridge Diversified, you can compare the effects of market volatilities on Calvert Conservative 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 Calvert Conservative with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Conservative and Stone Ridge.

Diversification Opportunities for Calvert Conservative and Stone Ridge

0.1

Correlation Coefficient

Calvert Conservative  Stone Ridge

Average diversification

The 3 months correlation between Calvert and Stone is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Conservative Allocatio 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 Calvert Conservative 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 Calvert Conservative Allocation 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 Calvert Conservative i.e., Calvert Conservative and Stone Ridge go up and down completely randomly.

Pair Corralation between Calvert Conservative and Stone Ridge

Assuming the 90 days horizon Calvert Conservative is expected to generate 1.09 times less return on investment than Stone Ridge. In addition to that, Calvert Conservative is 1.96 times more volatile than Stone Ridge Diversified. It trades about 0.23 of its total potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.48 per unit of volatility. If you would invest  1,131  in Stone Ridge Diversified on September 17, 2024 and sell it today you would earn a total of  15.00  from holding Stone Ridge Diversified or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Calvert Conservative Allocatio  vs.  Stone Ridge Diversified

Calvert Conservative

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Conservative Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Calvert Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stone Ridge Diversified

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge Diversified are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Stone Ridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Calvert Conservative and Stone Ridge

The main advantage of trading using opposite Calvert Conservative and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Conservative 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.

The idea behind Calvert Conservative Allocation and Stone Ridge Diversified pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.