Correlation Between Stone Ridge and Nuveen Santa

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

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

Diversification Opportunities for Stone Ridge and Nuveen Santa

0.32

Correlation Coefficient

Stone Ridge  Nuveen Santa

Weak diversification

The 3 months correlation between Stone and Nuveen is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge High and Nuveen Santa Barbara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Santa Barbara 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 High are associated (or correlated) with Nuveen Santa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Santa Barbara has no effect on the direction of Stone Ridge i.e., Stone Ridge and Nuveen Santa go up and down completely randomly.

Pair Corralation between Stone Ridge and Nuveen Santa

Assuming the 90 days horizon Stone Ridge is expected to generate 1.83 times less return on investment than Nuveen Santa. But when comparing it to its historical volatility, Stone Ridge High is 6.22 times less risky than Nuveen Santa. It trades about 0.96 of its potential returns per unit of risk. Nuveen Santa Barbara is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  6,591  in Nuveen Santa Barbara on September 16, 2024 and sell it today you would earn a total of  155.00  from holding Nuveen Santa Barbara or generate 2.35% 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 High  vs.  Nuveen Santa Barbara

Stone Ridge High

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge High are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Stone Ridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Santa Barbara

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Santa Barbara are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Nuveen Santa 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 Nuveen Santa

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

The idea behind Stone Ridge High and Nuveen Santa Barbara 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.