Correlation Between Multifactor and T Rowe

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

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

Diversification Opportunities for Multifactor and T Rowe

0.97

Correlation Coefficient

Multifactor  T Rowe

Almost no diversification

The 3 months correlation between Multifactor and RRGSX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Multifactor Equity Fund 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 Multifactor 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 Multifactor Equity Fund 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 Multifactor i.e., Multifactor and T Rowe go up and down completely randomly.

Pair Corralation between Multifactor and T Rowe

Assuming the 90 days horizon Multifactor is expected to generate 1.26 times less return on investment than T Rowe. But when comparing it to its historical volatility, Multifactor Equity Fund is 1.2 times less risky than T Rowe. It trades about 0.19 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  9,424  in T Rowe Price on May 14, 2025 and sell it today you would earn a total of  945.00  from holding T Rowe Price or generate 10.03% return on investment over 90 days.

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

Multifactor Equity Fund  vs.  T Rowe Price

Multifactor Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multifactor Equity Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multifactor 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 basic indicators, T Rowe may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Multifactor and T Rowe

The main advantage of trading using opposite Multifactor and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multifactor 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 Multifactor Equity Fund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.