Correlation Between Clough Global and RiverNorthDoubleLine

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

By analyzing existing cross correlation between Clough Global Opportunities and RiverNorthDoubleLine Strategic Opportunity, you can compare the effects of market volatilities on Clough Global and RiverNorthDoubleLine 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 Clough Global with a short position of RiverNorthDoubleLine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clough Global and RiverNorthDoubleLine.

Diversification Opportunities for Clough Global and RiverNorthDoubleLine

0.7

Correlation Coefficient

Clough Global  RiverNorthDoubleLine

Poor diversification

The 3 months correlation between Clough and RiverNorthDoubleLine is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Clough Global Opportunities and RiverNorthDoubleLine Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorthDoubleLine and Clough Global 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 Clough Global Opportunities are associated (or correlated) with RiverNorthDoubleLine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverNorthDoubleLine has no effect on the direction of Clough Global i.e., Clough Global and RiverNorthDoubleLine go up and down completely randomly.

Pair Corralation between Clough Global and RiverNorthDoubleLine

Considering the 90-day investment horizon Clough Global is expected to generate 1.02 times less return on investment than RiverNorthDoubleLine. In addition to that, Clough Global is 1.33 times more volatile than RiverNorthDoubleLine Strategic Opportunity. It trades about 0.07 of its total potential returns per unit of risk. RiverNorthDoubleLine Strategic Opportunity is currently generating about 0.09 per unit of volatility. If you would invest  625.00  in RiverNorthDoubleLine Strategic Opportunity on November 29, 2024 and sell it today you would earn a total of  243.00  from holding RiverNorthDoubleLine Strategic Opportunity or generate 38.88% return on investment over 90 days.

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

Clough Global Opportunities  vs.  RiverNorthDoubleLine Strategic

Clough Global Opport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clough Global Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy essential indicators, Clough Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

RiverNorthDoubleLine

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorthDoubleLine Strategic Opportunity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, RiverNorthDoubleLine is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Clough Global and RiverNorthDoubleLine

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

The idea behind Clough Global Opportunities and RiverNorthDoubleLine Strategic Opportunity 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.