Correlation Between Ridgeworth Innovative and Amer Beacon

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

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

Diversification Opportunities for Ridgeworth Innovative and Amer Beacon

0.96

Correlation Coefficient

Ridgeworth Innovative  Amer Beacon

Almost no diversification

The 3 months correlation between Ridgeworth and Amer is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Ridgeworth Innovative Growth and Amer Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Ark and Ridgeworth Innovative 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 Ridgeworth Innovative Growth are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Ark has no effect on the direction of Ridgeworth Innovative i.e., Ridgeworth Innovative and Amer Beacon go up and down completely randomly.

Pair Corralation between Ridgeworth Innovative and Amer Beacon

Assuming the 90 days horizon Ridgeworth Innovative Growth is expected to under-perform the Amer Beacon. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ridgeworth Innovative Growth is 1.42 times less risky than Amer Beacon. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Amer Beacon Ark is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,543  in Amer Beacon Ark on December 30, 2024 and sell it today you would lose (234.00) from holding Amer Beacon Ark or give up 15.17% of portfolio value over 90 days.

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

Ridgeworth Innovative Growth  vs.  Amer Beacon Ark

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.

Amer Beacon Ark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amer Beacon Ark 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 Ridgeworth Innovative and Amer Beacon

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

The idea behind Ridgeworth Innovative Growth and Amer Beacon Ark 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.