Correlation Between Blackrock Lifepath and Stone Ridge

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

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

Diversification Opportunities for Blackrock Lifepath and Stone Ridge

0.72

Correlation Coefficient

Blackrock Lifepath  Stone Ridge

Poor diversification

The 3 months correlation between Blackrock and Stone is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Lifepath Idx 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 Blackrock Lifepath 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 Blackrock Lifepath Idx 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 Blackrock Lifepath i.e., Blackrock Lifepath and Stone Ridge go up and down completely randomly.

Pair Corralation between Blackrock Lifepath and Stone Ridge

Assuming the 90 days horizon Blackrock Lifepath Idx is expected to generate 3.54 times more return on investment than Stone Ridge. However, Blackrock Lifepath is 3.54 times more volatile than Stone Ridge Diversified. It trades about 0.12 of its potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.15 per unit of risk. If you would invest  2,088  in Blackrock Lifepath Idx on September 13, 2024 and sell it today you would earn a total of  471.00  from holding Blackrock Lifepath Idx or generate 22.56% return on investment over 90 days.

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

Blackrock Lifepath Idx  vs.  Stone Ridge Diversified

Blackrock Lifepath Idx

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Lifepath Idx are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Blackrock Lifepath 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

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge Diversified are ranked lower than 12 (%) 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 Blackrock Lifepath and Stone Ridge

The main advantage of trading using opposite Blackrock Lifepath and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Lifepath 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 Blackrock Lifepath Idx 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..