Correlation Between Lifex Inflation and Stone Ridge

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

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

Diversification Opportunities for Lifex Inflation and Stone Ridge

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Correlation Coefficient

Lifex Inflation  Stone Ridge

Pay attention - limited upside

The 3 months correlation between Lifex and Stone is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lifex Inflation Protected Inco 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 Lifex Inflation 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 Lifex Inflation Protected Income 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 Lifex Inflation i.e., Lifex Inflation and Stone Ridge go up and down completely randomly.

Pair Corralation between Lifex Inflation and Stone Ridge

If you would invest  1,057  in Stone Ridge Diversified on December 27, 2024 and sell it today you would earn a total of  8.00  from holding Stone Ridge Diversified or generate 0.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lifex Inflation Protected Inco  vs.  Stone Ridge Diversified

Lifex Inflation Prot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifex Inflation Protected Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Lifex Inflation 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

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge Diversified are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, 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 Lifex Inflation and Stone Ridge

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

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.