Correlation Between Virtus Kar and Ridgeworth Seix

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

By analyzing existing cross correlation between Virtus Kar Small Cap and Ridgeworth Seix E, you can compare the effects of market volatilities on Virtus Kar and Ridgeworth Seix 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 Seix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Ridgeworth Seix.

Diversification Opportunities for Virtus Kar and Ridgeworth Seix

-0.73

Correlation Coefficient

Virtus Kar  Ridgeworth Seix

Pay attention - limited upside

The 3 months correlation between Virtus and Ridgeworth is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Ridgeworth Seix E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Seix E 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 Small Cap are associated (or correlated) with Ridgeworth Seix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Seix E has no effect on the direction of Virtus Kar i.e., Virtus Kar and Ridgeworth Seix go up and down completely randomly.

Pair Corralation between Virtus Kar and Ridgeworth Seix

Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 3.38 times more return on investment than Ridgeworth Seix. However, Virtus Kar is 3.38 times more volatile than Ridgeworth Seix E. It trades about 0.33 of its potential returns per unit of risk. Ridgeworth Seix E is currently generating about 0.09 per unit of risk. If you would invest  2,673  in Virtus Kar Small Cap on August 31, 2024 and sell it today you would earn a total of  258.00  from holding Virtus Kar Small Cap or generate 9.65% return on investment over 90 days.

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

Virtus Kar Small Cap  vs.  Ridgeworth Seix E

Virtus Kar Small

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Small Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Virtus Kar showed solid returns over the last few months and may actually be approaching a breakup point.

Ridgeworth Seix E

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Virtus Kar and Ridgeworth Seix

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

The idea behind Virtus Kar Small Cap and Ridgeworth Seix E 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.