Correlation Between Stone Ridge and Blackrock Core

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

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

Diversification Opportunities for Stone Ridge and Blackrock Core

-0.5

Correlation Coefficient

Stone Ridge  Blackrock Core

Very good diversification

The 3 months correlation between Stone and Blackrock is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Blackrock Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Core Bond 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 Diversified are associated (or correlated) with Blackrock Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Core Bond has no effect on the direction of Stone Ridge i.e., Stone Ridge and Blackrock Core go up and down completely randomly.

Pair Corralation between Stone Ridge and Blackrock Core

Assuming the 90 days horizon Stone Ridge is expected to generate 4.93 times less return on investment than Blackrock Core. But when comparing it to its historical volatility, Stone Ridge Diversified is 1.52 times less risky than Blackrock Core. It trades about 0.05 of its potential returns per unit of risk. Blackrock Core Bond is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  803.00  in Blackrock Core Bond on December 21, 2024 and sell it today you would earn a total of  23.00  from holding Blackrock Core Bond or generate 2.86% return on investment over 90 days.

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

Stone Ridge Diversified  vs.  Blackrock Core Bond

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 3 (%) 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.

Blackrock Core Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Core Bond are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Blackrock Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stone Ridge and Blackrock Core

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

The idea behind Stone Ridge Diversified and Blackrock Core Bond 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.