Correlation Between Perkins Small and T Rowe

Can any of the company-specific risk be diversified away by investing in both Perkins Small and T Rowe 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 Perkins Small and T Rowe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perkins Small Cap and T Rowe Price, you can compare the effects of market volatilities on Perkins Small and T Rowe 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 Perkins Small with a short position of T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perkins Small and T Rowe.

Diversification Opportunities for Perkins Small and T Rowe

0.6

Correlation Coefficient

Perkins Small  T Rowe

Poor diversification

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

Pair Corralation between Perkins Small and T Rowe

Assuming the 90 days horizon Perkins Small is expected to generate 1.38 times less return on investment than T Rowe. In addition to that, Perkins Small is 1.57 times more volatile than T Rowe Price. It trades about 0.09 of its total potential returns per unit of risk. T Rowe Price is currently generating about 0.2 per unit of volatility. If you would invest  4,004  in T Rowe Price on May 8, 2025 and sell it today you would earn a total of  378.00  from holding T Rowe Price or generate 9.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Perkins Small Cap  vs.  T Rowe Price

Perkins Small Cap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Perkins Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Perkins Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

T Rowe Price

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, T Rowe may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Perkins Small and T Rowe

The main advantage of trading using opposite Perkins Small and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perkins Small position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Perkins Small Cap and T Rowe Price 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.