Correlation Between Ridgeworth Innovative and Marsico Focus

Can any of the company-specific risk be diversified away by investing in both Ridgeworth Innovative and Marsico Focus 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 Marsico Focus 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 Marsico Focus, you can compare the effects of market volatilities on Ridgeworth Innovative and Marsico Focus 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 Marsico Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ridgeworth Innovative and Marsico Focus.

Diversification Opportunities for Ridgeworth Innovative and Marsico Focus

0.94

Correlation Coefficient

Ridgeworth Innovative  Marsico Focus

Almost no diversification

The 3 months correlation between Ridgeworth and Marsico is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ridgeworth Innovative Growth and Marsico Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Focus 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 Marsico Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Focus has no effect on the direction of Ridgeworth Innovative i.e., Ridgeworth Innovative and Marsico Focus go up and down completely randomly.

Pair Corralation between Ridgeworth Innovative and Marsico Focus

Assuming the 90 days horizon Ridgeworth Innovative Growth is expected to under-perform the Marsico Focus. In addition to that, Ridgeworth Innovative is 1.32 times more volatile than Marsico Focus. It trades about -0.11 of its total potential returns per unit of risk. Marsico Focus is currently generating about -0.09 per unit of volatility. If you would invest  2,970  in Marsico Focus on December 31, 2024 and sell it today you would lose (255.00) from holding Marsico Focus or give up 8.59% 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.  Marsico Focus

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 May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Marsico Focus

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ridgeworth Innovative and Marsico Focus

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

The idea behind Ridgeworth Innovative Growth and Marsico Focus 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.