Correlation Between Ridgeworth International and Virtus Convertible

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

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

Diversification Opportunities for Ridgeworth International and Virtus Convertible

-0.62

Correlation Coefficient

Ridgeworth International  Virtus Convertible

Excellent diversification

The 3 months correlation between RIDGEWORTH and Virtus is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ridgeworth International Equit and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible and Ridgeworth International 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 International Equity are associated (or correlated) with Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Ridgeworth International i.e., Ridgeworth International and Virtus Convertible go up and down completely randomly.

Pair Corralation between Ridgeworth International and Virtus Convertible

Assuming the 90 days horizon Ridgeworth International is expected to generate 20.05 times less return on investment than Virtus Convertible. In addition to that, Ridgeworth International is 1.04 times more volatile than Virtus Convertible. It trades about 0.03 of its total potential returns per unit of risk. Virtus Convertible is currently generating about 0.54 per unit of volatility. If you would invest  3,452  in Virtus Convertible on August 31, 2024 and sell it today you would earn a total of  270.00  from holding Virtus Convertible or generate 7.82% return on investment over 90 days.

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

Ridgeworth International Equit  vs.  Virtus Convertible

Ridgeworth International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Virtus Convertible

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Virtus Convertible may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ridgeworth International and Virtus Convertible

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

The idea behind Ridgeworth International Equity and Virtus Convertible 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.