Correlation Between Stone Ridge and Jpmorgan

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

Diversification Opportunities for Stone Ridge and Jpmorgan

0.34

Correlation Coefficient

Stone Ridge  Jpmorgan

Weak diversification

The 3 months correlation between Stone and Jpmorgan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Jpmorgan Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Small Pany 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 Jpmorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Small Pany has no effect on the direction of Stone Ridge i.e., Stone Ridge and Jpmorgan go up and down completely randomly.

Pair Corralation between Stone Ridge and Jpmorgan

Assuming the 90 days horizon Stone Ridge Diversified is expected to generate 0.17 times more return on investment than Jpmorgan. However, Stone Ridge Diversified is 5.98 times less risky than Jpmorgan. It trades about 0.05 of its potential returns per unit of risk. Jpmorgan Small Pany is currently generating about -0.11 per unit of risk. If you would invest  1,060  in Stone Ridge Diversified on December 21, 2024 and sell it today you would earn a total of  6.00  from holding Stone Ridge Diversified or generate 0.57% return on investment over 90 days.

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

Stone Ridge Diversified  vs.  Jpmorgan Small Pany

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.

Jpmorgan Small Pany

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jpmorgan Small Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Stone Ridge and Jpmorgan

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

The idea behind Stone Ridge Diversified and Jpmorgan Small Pany 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.