Correlation Between Stone Ridge and Voya Real

Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Voya Real 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 Voya Real 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 Voya Real Estate, you can compare the effects of market volatilities on Stone Ridge and Voya Real 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 Voya Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Voya Real.

Diversification Opportunities for Stone Ridge and Voya Real

-0.37

Correlation Coefficient

Stone Ridge  Voya Real

Very good diversification

The 3 months correlation between Stone and Voya is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Voya Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Real Estate 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 Voya Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Real Estate has no effect on the direction of Stone Ridge i.e., Stone Ridge and Voya Real go up and down completely randomly.

Pair Corralation between Stone Ridge and Voya Real

Assuming the 90 days horizon Stone Ridge is expected to generate 13.02 times less return on investment than Voya Real. But when comparing it to its historical volatility, Stone Ridge Diversified is 5.48 times less risky than Voya Real. It trades about 0.03 of its potential returns per unit of risk. Voya Real Estate is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  953.00  in Voya Real Estate on December 19, 2024 and sell it today you would earn a total of  34.00  from holding Voya Real Estate or generate 3.57% return on investment over 90 days.

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

Stone Ridge Diversified  vs.  Voya Real Estate

Stone Ridge Diversified

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge Diversified are ranked lower than 2 (%) 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.

Voya Real Estate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Real Estate are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stone Ridge and Voya Real

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

The idea behind Stone Ridge Diversified and Voya Real Estate 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.