Correlation Between RiverNorthDoubleLine and Main Street

Can any of the company-specific risk be diversified away by investing in both RiverNorthDoubleLine and Main Street 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 Main Street 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 Main Street Capital, you can compare the effects of market volatilities on RiverNorthDoubleLine and Main Street 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 Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorthDoubleLine and Main Street.

Diversification Opportunities for RiverNorthDoubleLine and Main Street

-0.75

Correlation Coefficient

RiverNorthDoubleLine  Main Street

Pay attention - limited upside

The 3 months correlation between RiverNorthDoubleLine and Main is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorthDoubleLine Strategic and Main Street Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Capital 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 Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Capital has no effect on the direction of RiverNorthDoubleLine i.e., RiverNorthDoubleLine and Main Street go up and down completely randomly.

Pair Corralation between RiverNorthDoubleLine and Main Street

Considering the 90-day investment horizon RiverNorthDoubleLine is expected to generate 2.27 times less return on investment than Main Street. But when comparing it to its historical volatility, RiverNorthDoubleLine Strategic Opportunity is 1.36 times less risky than Main Street. It trades about 0.1 of its potential returns per unit of risk. Main Street Capital is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,912  in Main Street Capital on September 7, 2024 and sell it today you would earn a total of  1,636  from holding Main Street Capital or generate 41.82% return on investment over 90 days.

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

RiverNorthDoubleLine Strategic  vs.  Main Street Capital

RiverNorthDoubleLine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RiverNorthDoubleLine Strategic Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Main Street Capital

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Main Street displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RiverNorthDoubleLine and Main Street

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

The idea behind RiverNorthDoubleLine Strategic Opportunity and Main Street Capital 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.