Correlation Between Virtus Kar and Ridgeworth Ceredex

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

By analyzing existing cross correlation between Virtus Kar Capital and Ridgeworth Ceredex Small, you can compare the effects of market volatilities on Virtus Kar and Ridgeworth Ceredex 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 Virtus Kar with a short position of Ridgeworth Ceredex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Ridgeworth Ceredex.

Diversification Opportunities for Virtus Kar and Ridgeworth Ceredex

0.92

Correlation Coefficient

Virtus Kar  Ridgeworth Ceredex

Almost no diversification

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

Pair Corralation between Virtus Kar and Ridgeworth Ceredex

Assuming the 90 days horizon Virtus Kar Capital is expected to generate 1.22 times more return on investment than Ridgeworth Ceredex. However, Virtus Kar is 1.22 times more volatile than Ridgeworth Ceredex Small. It trades about -0.09 of its potential returns per unit of risk. Ridgeworth Ceredex Small is currently generating about -0.11 per unit of risk. If you would invest  1,068  in Virtus Kar Capital on December 30, 2024 and sell it today you would lose (77.00) from holding Virtus Kar Capital or give up 7.21% of portfolio value over 90 days.

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

Virtus Kar Capital  vs.  Ridgeworth Ceredex Small

Virtus Kar Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Kar Capital 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 Ceredex Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ridgeworth Ceredex Small 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 Virtus Kar and Ridgeworth Ceredex

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

The idea behind Virtus Kar Capital and Ridgeworth Ceredex Small 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.