Correlation Between Gmo Asset and Ridgeworth Ceredex

Can any of the company-specific risk be diversified away by investing in both Gmo Asset and Ridgeworth Ceredex 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 Gmo Asset and Ridgeworth Ceredex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gmo Asset Allocation and Ridgeworth Ceredex Mid Cap, you can compare the effects of market volatilities on Gmo Asset and Ridgeworth Ceredex 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 Gmo Asset with a short position of Ridgeworth Ceredex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Asset and Ridgeworth Ceredex.

Diversification Opportunities for Gmo Asset and Ridgeworth Ceredex

-0.7

Correlation Coefficient

Gmo Asset  Ridgeworth Ceredex

Excellent diversification

The 3 months correlation between Gmo and Ridgeworth is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Asset Allocation and Ridgeworth Ceredex Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Ceredex Mid and Gmo 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 Gmo Asset Allocation are associated (or correlated) with Ridgeworth Ceredex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Ceredex Mid has no effect on the direction of Gmo Asset i.e., Gmo Asset and Ridgeworth Ceredex go up and down completely randomly.

Pair Corralation between Gmo Asset and Ridgeworth Ceredex

Assuming the 90 days horizon Gmo Asset Allocation is expected to under-perform the Ridgeworth Ceredex. In addition to that, Gmo Asset is 1.01 times more volatile than Ridgeworth Ceredex Mid Cap. It trades about -0.12 of its total potential returns per unit of risk. Ridgeworth Ceredex Mid Cap is currently generating about 0.13 per unit of volatility. If you would invest  1,241  in Ridgeworth Ceredex Mid Cap on August 31, 2024 and sell it today you would earn a total of  94.00  from holding Ridgeworth Ceredex Mid Cap or generate 7.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Gmo Asset Allocation  vs.  Ridgeworth Ceredex Mid Cap

Gmo Asset Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Asset Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ridgeworth Ceredex Mid

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ridgeworth Ceredex Mid Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ridgeworth Ceredex may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Gmo Asset and Ridgeworth Ceredex

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

The idea behind Gmo Asset Allocation and Ridgeworth Ceredex Mid Cap 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.

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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.