Correlation Between Ridgeworth Innovative and Matthews Asia

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

Diversification Opportunities for Ridgeworth Innovative and Matthews Asia

0.01

Correlation Coefficient

Ridgeworth Innovative  Matthews Asia

Significant diversification

The 3 months correlation between Ridgeworth and Matthews is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ridgeworth Innovative Growth and Matthews Asia Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Innovators 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 Matthews Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asia Innovators has no effect on the direction of Ridgeworth Innovative i.e., Ridgeworth Innovative and Matthews Asia go up and down completely randomly.

Pair Corralation between Ridgeworth Innovative and Matthews Asia

Assuming the 90 days horizon Ridgeworth Innovative Growth is expected to under-perform the Matthews Asia. In addition to that, Ridgeworth Innovative is 1.2 times more volatile than Matthews Asia Innovators. It trades about -0.38 of its total potential returns per unit of risk. Matthews Asia Innovators is currently generating about 0.03 per unit of volatility. If you would invest  1,293  in Matthews Asia Innovators on December 5, 2024 and sell it today you would earn a total of  10.00  from holding Matthews Asia Innovators or generate 0.77% return on investment over 90 days.

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

Ridgeworth Innovative Growth  vs.  Matthews Asia Innovators

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.

Matthews Asia Innovators

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matthews Asia Innovators has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Matthews Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ridgeworth Innovative and Matthews Asia

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

The idea behind Ridgeworth Innovative Growth and Matthews Asia Innovators 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.