Correlation Between Amg River and Rivernorthoaktree

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

By analyzing existing cross correlation between Amg River Road and Rivernorthoaktree High Income, you can compare the effects of market volatilities on Amg River and Rivernorthoaktree 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 Amg River with a short position of Rivernorthoaktree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Rivernorthoaktree.

Diversification Opportunities for Amg River and Rivernorthoaktree

0.04

Correlation Coefficient

Amg River  Rivernorthoaktree

Significant diversification

The 3 months correlation between Amg and Rivernorthoaktree is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Rivernorthoaktree High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivernorthoaktree High and Amg River 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 Amg River Road are associated (or correlated) with Rivernorthoaktree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivernorthoaktree High has no effect on the direction of Amg River i.e., Amg River and Rivernorthoaktree go up and down completely randomly.

Pair Corralation between Amg River and Rivernorthoaktree

Assuming the 90 days horizon Amg River Road is expected to under-perform the Rivernorthoaktree. In addition to that, Amg River is 5.55 times more volatile than Rivernorthoaktree High Income. It trades about -0.06 of its total potential returns per unit of risk. Rivernorthoaktree High Income is currently generating about 0.15 per unit of volatility. If you would invest  868.00  in Rivernorthoaktree High Income on December 25, 2024 and sell it today you would earn a total of  11.00  from holding Rivernorthoaktree High Income or generate 1.27% return on investment over 90 days.

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

Amg River Road  vs.  Rivernorthoaktree High Income

Amg River Road

Risk-Adjusted Performance

Very Weak

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

Rivernorthoaktree High

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rivernorthoaktree High Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rivernorthoaktree is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amg River and Rivernorthoaktree

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

The idea behind Amg River Road and Rivernorthoaktree High Income 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.