Correlation Between Stone Ridge and Global X

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

By analyzing existing cross correlation between Stone Ridge 2059 and Global X Funds, you can compare the effects of market volatilities on Stone Ridge and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Global X.

Diversification Opportunities for Stone Ridge and Global X

-0.13

Correlation Coefficient

Stone Ridge  Global X

Good diversification

The 3 months correlation between Stone and Global is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge 2059 and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 2059 are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Stone Ridge i.e., Stone Ridge and Global X go up and down completely randomly.

Pair Corralation between Stone Ridge and Global X

Given the investment horizon of 90 days Stone Ridge 2059 is expected to generate 2.56 times more return on investment than Global X. However, Stone Ridge is 2.56 times more volatile than Global X Funds. It trades about 0.05 of its potential returns per unit of risk. Global X Funds is currently generating about 0.0 per unit of risk. If you would invest  1,715  in Stone Ridge 2059 on August 30, 2024 and sell it today you would earn a total of  15.00  from holding Stone Ridge 2059 or generate 0.87% return on investment over 90 days.

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

Stone Ridge 2059  vs.  Global X Funds

Stone Ridge 2059

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stone Ridge 2059 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Stone Ridge is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Global X Funds

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Global X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stone Ridge and Global X

The main advantage of trading using opposite Stone Ridge and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.

The idea behind Stone Ridge 2059 and Global X Funds 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.