Correlation Between RiverFront Dynamic and Opus Small

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

By analyzing existing cross correlation between RiverFront Dynamic Dividend and Opus Small Cap, you can compare the effects of market volatilities on RiverFront Dynamic and Opus Small 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 RiverFront Dynamic with a short position of Opus Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverFront Dynamic and Opus Small.

Diversification Opportunities for RiverFront Dynamic and Opus Small

0.93

Correlation Coefficient

RiverFront Dynamic  Opus Small

Almost no diversification

The 3 months correlation between RiverFront and Opus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding RiverFront Dynamic Dividend and Opus Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opus Small Cap and RiverFront Dynamic 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 RiverFront Dynamic Dividend are associated (or correlated) with Opus Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opus Small Cap has no effect on the direction of RiverFront Dynamic i.e., RiverFront Dynamic and Opus Small go up and down completely randomly.

Pair Corralation between RiverFront Dynamic and Opus Small

Given the investment horizon of 90 days RiverFront Dynamic Dividend is expected to generate 1.03 times more return on investment than Opus Small. However, RiverFront Dynamic is 1.03 times more volatile than Opus Small Cap. It trades about -0.06 of its potential returns per unit of risk. Opus Small Cap is currently generating about -0.1 per unit of risk. If you would invest  5,569  in RiverFront Dynamic Dividend on December 28, 2024 and sell it today you would lose (205.00) from holding RiverFront Dynamic Dividend or give up 3.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

RiverFront Dynamic Dividend  vs.  Opus Small Cap

RiverFront Dynamic

Risk-Adjusted Performance

Very Weak

Over the last 90 days RiverFront Dynamic Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, RiverFront Dynamic is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Opus Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Opus Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Opus Small is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with RiverFront Dynamic and Opus Small

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

The idea behind RiverFront Dynamic Dividend and Opus Small Cap 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.