Correlation Between Global X and Stone Ridge

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

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

Diversification Opportunities for Global X and Stone Ridge

0.95

Correlation Coefficient

Global X  Stone Ridge

Almost no diversification

The 3 months correlation between Global and Stone is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Stone Ridge 2059 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2059 and Global X 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 Global X Funds 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 2059 has no effect on the direction of Global X i.e., Global X and Stone Ridge go up and down completely randomly.

Pair Corralation between Global X and Stone Ridge

Given the investment horizon of 90 days Global X Funds is expected to generate 0.47 times more return on investment than Stone Ridge. However, Global X Funds is 2.13 times less risky than Stone Ridge. It trades about 0.16 of its potential returns per unit of risk. Stone Ridge 2059 is currently generating about 0.03 per unit of risk. If you would invest  4,772  in Global X Funds on December 28, 2024 and sell it today you would earn a total of  127.77  from holding Global X Funds or generate 2.68% return on investment over 90 days.

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

Global X Funds  vs.  Stone Ridge 2059

Global X Funds

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Global X is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Stone Ridge 2059

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge 2059 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Global X and Stone Ridge

The main advantage of trading using opposite Global X and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Funds and Stone Ridge 2059 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.