Correlation Between T REX and Stone Ridge

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

By analyzing existing cross correlation between T REX 2X Long and Stone Ridge 2057, you can compare the effects of market volatilities on T REX 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 T REX with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of T REX and Stone Ridge.

Diversification Opportunities for T REX and Stone Ridge

-0.77

Correlation Coefficient

T REX  Stone Ridge

Pay attention - limited upside

The 3 months correlation between MSTU and Stone is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding T REX 2X Long and Stone Ridge 2057 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2057 and T REX 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 T REX 2X Long 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 2057 has no effect on the direction of T REX i.e., T REX and Stone Ridge go up and down completely randomly.

Pair Corralation between T REX and Stone Ridge

Given the investment horizon of 90 days T REX 2X Long is expected to generate 21.29 times more return on investment than Stone Ridge. However, T REX is 21.29 times more volatile than Stone Ridge 2057. It trades about 0.02 of its potential returns per unit of risk. Stone Ridge 2057 is currently generating about 0.07 per unit of risk. If you would invest  1,000.00  in T REX 2X Long on December 27, 2024 and sell it today you would lose (270.00) from holding T REX 2X Long or give up 27.0% of portfolio value over 90 days.

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

T REX 2X Long  vs.  Stone Ridge 2057

T REX 2X

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in T REX 2X Long are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T REX may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Stone Ridge 2057

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge 2057 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Stone Ridge is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with T REX and Stone Ridge

The main advantage of trading using opposite T REX and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T REX 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 T REX 2X Long and Stone Ridge 2057 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.