Correlation Between Riversource Series and Royce International

Can any of the company-specific risk be diversified away by investing in both Riversource Series and Royce International 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 Royce International 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 Royce International Small Cap, you can compare the effects of market volatilities on Riversource Series and Royce International 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 Royce International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Riversource Series and Royce International.

Diversification Opportunities for Riversource Series and Royce International

0.84

Correlation Coefficient

Riversource Series  Royce International

Very poor diversification

The 3 months correlation between Riversource and Royce is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Riversource Series Trust and Royce International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce International 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 Royce International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce International has no effect on the direction of Riversource Series i.e., Riversource Series and Royce International go up and down completely randomly.

Pair Corralation between Riversource Series and Royce International

Assuming the 90 days horizon Riversource Series is expected to generate 1.01 times less return on investment than Royce International. In addition to that, Riversource Series is 1.51 times more volatile than Royce International Small Cap. It trades about 0.23 of its total potential returns per unit of risk. Royce International Small Cap is currently generating about 0.35 per unit of volatility. If you would invest  1,225  in Royce International Small Cap on April 28, 2025 and sell it today you would earn a total of  200.00  from holding Royce International Small Cap or generate 16.33% 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.  Royce International Small Cap

Riversource Series Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Riversource Series Trust are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Riversource Series showed solid returns over the last few months and may actually be approaching a breakup point.

Royce International

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Royce International Small Cap are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Royce International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Riversource Series and Royce International

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

The idea behind Riversource Series Trust and Royce International Small Cap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.