Correlation Between Riversource Series and Smallcap Fund

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

By analyzing existing cross correlation between Riversource Series Trust and Smallcap Fund Fka, you can compare the effects of market volatilities on Riversource Series and Smallcap 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 Riversource Series with a short position of Smallcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Riversource Series and Smallcap Fund.

Diversification Opportunities for Riversource Series and Smallcap Fund

0.83

Correlation Coefficient

Riversource Series  Smallcap Fund

Very poor diversification

The 3 months correlation between Riversource and Smallcap is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Riversource Series Trust and Smallcap Fund Fka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Fund Fka and Riversource Series 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 Riversource Series Trust are associated (or correlated) with Smallcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Fund Fka has no effect on the direction of Riversource Series i.e., Riversource Series and Smallcap Fund go up and down completely randomly.

Pair Corralation between Riversource Series and Smallcap Fund

Assuming the 90 days horizon Riversource Series Trust is expected to generate 1.09 times more return on investment than Smallcap Fund. However, Riversource Series is 1.09 times more volatile than Smallcap Fund Fka. It trades about 0.12 of its potential returns per unit of risk. Smallcap Fund Fka is currently generating about 0.12 per unit of risk. If you would invest  985.00  in Riversource Series Trust on May 10, 2025 and sell it today you would earn a total of  70.00  from holding Riversource Series Trust or generate 7.11% return on investment over 90 days.

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

Riversource Series Trust  vs.  Smallcap Fund Fka

Riversource Series Trust

Risk-Adjusted Performance

Fair

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

Smallcap Fund Fka

Risk-Adjusted Performance

Fair

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

Pair Trading with Riversource Series and Smallcap Fund

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

The idea behind Riversource Series Trust and Smallcap Fund Fka 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.