Correlation Between Western Asset and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Western Asset and Stone Ridge 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 Western Asset and Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Stone Ridge Diversified, you can compare the effects of market volatilities on Western Asset and Stone Ridge 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 Western Asset with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Stone Ridge.
Diversification Opportunities for Western Asset and Stone Ridge
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Stone is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Stone Ridge Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge Diversified and Western Asset 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 Western Asset Diversified are associated (or correlated) with Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge Diversified has no effect on the direction of Western Asset i.e., Western Asset and Stone Ridge go up and down completely randomly.
Pair Corralation between Western Asset and Stone Ridge
Assuming the 90 days horizon Western Asset Diversified is expected to generate 1.29 times more return on investment than Stone Ridge. However, Western Asset is 1.29 times more volatile than Stone Ridge Diversified. It trades about 0.18 of its potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.23 per unit of risk. If you would invest 1,463 in Western Asset Diversified on June 2, 2025 and sell it today you would earn a total of 41.00 from holding Western Asset Diversified or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Stone Ridge Diversified
Performance |
| Timeline |
| Western Asset Diversified |
| Stone Ridge Diversified |
Western Asset and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Stone Ridge
The main advantage of trading using opposite Western Asset and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| Western Asset vs. T Rowe Price | Western Asset vs. Guidemark E Fixed | Western Asset vs. Ab Select Equity | Western Asset vs. Enhanced Fixed Income |
| Stone Ridge vs. Maryland Short Term Tax Free | Stone Ridge vs. Abr Enhanced Short | Stone Ridge vs. Angel Oak Ultrashort | Stone Ridge vs. Barings Active Short |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |