Correlation Between Rivernorth Opportunities and Ares Capital

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

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

Diversification Opportunities for Rivernorth Opportunities and Ares Capital

0.66

Correlation Coefficient

Rivernorth Opportunities  Ares Capital

Poor diversification

The 3 months correlation between Rivernorth and Ares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Rivernorth Opportunities and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Rivernorth Opportunities 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 Rivernorth Opportunities are associated (or correlated) with Ares Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Capital has no effect on the direction of Rivernorth Opportunities i.e., Rivernorth Opportunities and Ares Capital go up and down completely randomly.

Pair Corralation between Rivernorth Opportunities and Ares Capital

Considering the 90-day investment horizon Rivernorth Opportunities is expected to generate 2.18 times less return on investment than Ares Capital. But when comparing it to its historical volatility, Rivernorth Opportunities is 1.06 times less risky than Ares Capital. It trades about 0.12 of its potential returns per unit of risk. Ares Capital is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,009  in Ares Capital on September 9, 2024 and sell it today you would earn a total of  212.00  from holding Ares Capital or generate 10.55% return on investment over 90 days.

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

Rivernorth Opportunities  vs.  Ares Capital

Rivernorth Opportunities

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rivernorth Opportunities are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable forward indicators, Rivernorth Opportunities is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ares Capital

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Capital are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ares Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rivernorth Opportunities and Ares Capital

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

The idea behind Rivernorth Opportunities and Ares 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.