Correlation Between Eagle Point and Rivernorth Opportunities

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

By analyzing existing cross correlation between Eagle Point Credit and Rivernorth Opportunities, you can compare the effects of market volatilities on Eagle Point and Rivernorth Opportunities 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 Eagle Point with a short position of Rivernorth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and Rivernorth Opportunities.

Diversification Opportunities for Eagle Point and Rivernorth Opportunities

0.22

Correlation Coefficient

Eagle Point  Rivernorth Opportunities

Modest diversification

The 3 months correlation between Eagle and Rivernorth is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and Rivernorth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivernorth Opportunities and Eagle Point 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 Eagle Point Credit are associated (or correlated) with Rivernorth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivernorth Opportunities has no effect on the direction of Eagle Point i.e., Eagle Point and Rivernorth Opportunities go up and down completely randomly.

Pair Corralation between Eagle Point and Rivernorth Opportunities

Considering the 90-day investment horizon Eagle Point Credit is expected to under-perform the Rivernorth Opportunities. In addition to that, Eagle Point is 2.39 times more volatile than Rivernorth Opportunities. It trades about -0.18 of its total potential returns per unit of risk. Rivernorth Opportunities is currently generating about -0.15 per unit of volatility. If you would invest  1,212  in Rivernorth Opportunities on December 29, 2024 and sell it today you would lose (25.00) from holding Rivernorth Opportunities or give up 2.06% of portfolio value over 90 days.

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

Eagle Point Credit  vs.  Rivernorth Opportunities

Eagle Point Credit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Point Credit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Rivernorth Opportunities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rivernorth Opportunities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Rivernorth Opportunities may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eagle Point and Rivernorth Opportunities

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

The idea behind Eagle Point Credit and Rivernorth Opportunities 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.