Correlation Between Stone Ridge and Wilmington Global
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Wilmington Global 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 Wilmington Global 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 Wilmington Global Alpha, you can compare the effects of market volatilities on Stone Ridge and Wilmington Global 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 Wilmington Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Wilmington Global.
Diversification Opportunities for Stone Ridge and Wilmington Global
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stone and Wilmington is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Wilmington Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Global Alpha 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 Wilmington Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Global Alpha has no effect on the direction of Stone Ridge i.e., Stone Ridge and Wilmington Global go up and down completely randomly.
Pair Corralation between Stone Ridge and Wilmington Global
Assuming the 90 days horizon Stone Ridge is expected to generate 1.93 times less return on investment than Wilmington Global. But when comparing it to its historical volatility, Stone Ridge Diversified is 1.74 times less risky than Wilmington Global. It trades about 0.05 of its potential returns per unit of risk. Wilmington Global Alpha is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,296 in Wilmington Global Alpha on December 22, 2024 and sell it today you would earn a total of 14.00 from holding Wilmington Global Alpha or generate 1.08% 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. Wilmington Global Alpha
Performance |
Timeline |
Stone Ridge Diversified |
Wilmington Global Alpha |
Stone Ridge and Wilmington Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stone Ridge and Wilmington Global
The main advantage of trading using opposite Stone Ridge and Wilmington Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Wilmington Global 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 Wilmington Global will offset losses from the drop in Wilmington Global's long position.Stone Ridge vs. Mfs Diversified Income | Stone Ridge vs. Legg Mason Bw | Stone Ridge vs. Lord Abbett Diversified | Stone Ridge vs. Madison Diversified Income |
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Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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