Correlation Between RiverNorthDoubleLine and North American

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

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

Diversification Opportunities for RiverNorthDoubleLine and North American

0.25

Correlation Coefficient

RiverNorthDoubleLine  North American

Modest diversification

The 3 months correlation between RiverNorthDoubleLine and North is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorthDoubleLine Strategic and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial and RiverNorthDoubleLine 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 RiverNorthDoubleLine Strategic Opportunity are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of RiverNorthDoubleLine i.e., RiverNorthDoubleLine and North American go up and down completely randomly.

Pair Corralation between RiverNorthDoubleLine and North American

Considering the 90-day investment horizon RiverNorthDoubleLine Strategic Opportunity is expected to generate 0.25 times more return on investment than North American. However, RiverNorthDoubleLine Strategic Opportunity is 3.94 times less risky than North American. It trades about 0.18 of its potential returns per unit of risk. North American Financial is currently generating about -0.02 per unit of risk. If you would invest  822.00  in RiverNorthDoubleLine Strategic Opportunity on December 1, 2024 and sell it today you would earn a total of  50.00  from holding RiverNorthDoubleLine Strategic Opportunity or generate 6.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	71.67%
Values	Daily Returns

RiverNorthDoubleLine Strategic  vs.  North American Financial

RiverNorthDoubleLine

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorthDoubleLine Strategic Opportunity are ranked lower than 14 (%) 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.

North American Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, North American is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RiverNorthDoubleLine and North American

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

The idea behind RiverNorthDoubleLine Strategic Opportunity and North American Financial 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.