Correlation Between Ridgeworth Seix and Retailing Fund

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

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

Diversification Opportunities for Ridgeworth Seix and Retailing Fund

0.6

Correlation Coefficient

Ridgeworth Seix  Retailing Fund

Poor diversification

The 3 months correlation between Ridgeworth and Retailing is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ridgeworth Seix Government and Retailing Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailing Fund Class and Ridgeworth Seix 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 Seix Government are associated (or correlated) with Retailing Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailing Fund Class has no effect on the direction of Ridgeworth Seix i.e., Ridgeworth Seix and Retailing Fund go up and down completely randomly.

Pair Corralation between Ridgeworth Seix and Retailing Fund

Assuming the 90 days horizon Ridgeworth Seix is expected to generate 4.96 times less return on investment than Retailing Fund. But when comparing it to its historical volatility, Ridgeworth Seix Government is 7.99 times less risky than Retailing Fund. It trades about 0.2 of its potential returns per unit of risk. Retailing Fund Class is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,040  in Retailing Fund Class on October 24, 2024 and sell it today you would earn a total of  270.00  from holding Retailing Fund Class or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Ridgeworth Seix Government  vs.  Retailing Fund Class

Ridgeworth Seix Gove

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ridgeworth Seix Government are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ridgeworth Seix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Retailing Fund Class

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Retailing Fund Class are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Retailing Fund may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ridgeworth Seix and Retailing Fund

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

The idea behind Ridgeworth Seix Government and Retailing Fund Class 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.