Correlation Between Model N and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both Model N and Stone Harbor 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 Model N and Stone Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Model N and Stone Harbor Emerging, you can compare the effects of market volatilities on Model N and Stone Harbor 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 Model N with a short position of Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Model N and Stone Harbor.
Diversification Opportunities for Model N and Stone Harbor
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Model and Stone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Model N and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging and Model N 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 Model N are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of Model N i.e., Model N and Stone Harbor go up and down completely randomly.
Pair Corralation between Model N and Stone Harbor
If you would invest 2,750 in Model N on January 25, 2024 and sell it today you would earn a total of 215.00 from holding Model N or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Model N vs. Stone Harbor Emerging
Performance |
| Timeline |
| Model N |
| Stone Harbor Emerging |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Model N and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Model N and Stone Harbor
The main advantage of trading using opposite Model N and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Model N position performs unexpectedly, Stone Harbor 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 Harbor will offset losses from the drop in Stone Harbor's long position.The idea behind Model N and Stone Harbor Emerging 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.| Stone Harbor vs. Mesirow Financial Small | Stone Harbor vs. Goldman Sachs Financial | Stone Harbor vs. Icon Financial Fund | Stone Harbor vs. Blackrock Financial Institutions |
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 Stocks Directory module to find actively traded stocks across global markets.
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