Correlation Between T Rowe and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and Stone Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Stone Harbor Local, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Stone Harbor.
Diversification Opportunities for T Rowe and Stone Harbor
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PAELX and Stone is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Stone Harbor Local in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Local and T Rowe 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 T Rowe Price 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 Local has no effect on the direction of T Rowe i.e., T Rowe and Stone Harbor go up and down completely randomly.
Pair Corralation between T Rowe and Stone Harbor
Assuming the 90 days horizon T Rowe Price is expected to generate 0.98 times more return on investment than Stone Harbor. However, T Rowe Price is 1.02 times less risky than Stone Harbor. It trades about -0.21 of its potential returns per unit of risk. Stone Harbor Local is currently generating about -0.27 per unit of risk. If you would invest 484.00 in T Rowe Price on January 24, 2024 and sell it today you would lose (11.00) from holding T Rowe Price or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. Stone Harbor Local
Performance |
| Timeline |
| T Rowe Price |
| Stone Harbor Local |
T Rowe and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Stone Harbor
The main advantage of trading using opposite T Rowe and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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 T Rowe Price and Stone Harbor Local 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. Stone Harbor Emerging | Stone Harbor vs. Stone Harbor Emerging | Stone Harbor vs. The Charles Schwab | Stone Harbor vs. State Street Core |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |