Correlation Between Growth Portfolio and Ridgeworth Innovative

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

By analyzing existing cross correlation between Growth Portfolio Class and Ridgeworth Innovative Growth, you can compare the effects of market volatilities on Growth Portfolio and Ridgeworth Innovative 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 Growth Portfolio with a short position of Ridgeworth Innovative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Portfolio and Ridgeworth Innovative.

Diversification Opportunities for Growth Portfolio and Ridgeworth Innovative

0.92

Correlation Coefficient

Growth Portfolio  Ridgeworth Innovative

Almost no diversification

The 3 months correlation between Growth and Ridgeworth is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Growth Portfolio Class and Ridgeworth Innovative Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Innovative and Growth Portfolio 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 Growth Portfolio Class are associated (or correlated) with Ridgeworth Innovative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Innovative has no effect on the direction of Growth Portfolio i.e., Growth Portfolio and Ridgeworth Innovative go up and down completely randomly.

Pair Corralation between Growth Portfolio and Ridgeworth Innovative

Assuming the 90 days horizon Growth Portfolio Class is expected to generate 1.13 times more return on investment than Ridgeworth Innovative. However, Growth Portfolio is 1.13 times more volatile than Ridgeworth Innovative Growth. It trades about -0.07 of its potential returns per unit of risk. Ridgeworth Innovative Growth is currently generating about -0.12 per unit of risk. If you would invest  5,083  in Growth Portfolio Class on December 30, 2024 and sell it today you would lose (530.00) from holding Growth Portfolio Class or give up 10.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Growth Portfolio Class  vs.  Ridgeworth Innovative Growth

Growth Portfolio Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Growth Portfolio Class 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 Innovative

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ridgeworth Innovative Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Growth Portfolio and Ridgeworth Innovative

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

The idea behind Growth Portfolio Class and Ridgeworth Innovative Growth 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.