Correlation Between Rivernorth Opportunities and Dodge Cox

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

By analyzing existing cross correlation between Rivernorth Opportunities and Dodge Stock Fund, you can compare the effects of market volatilities on Rivernorth Opportunities and Dodge Cox 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 Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivernorth Opportunities and Dodge Cox.

Diversification Opportunities for Rivernorth Opportunities and Dodge Cox

0.83

Correlation Coefficient

Rivernorth Opportunities  Dodge Cox

Very poor diversification

The 3 months correlation between Rivernorth and Dodge is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Rivernorth Opportunities and Dodge Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Stock Fund 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 Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Stock Fund has no effect on the direction of Rivernorth Opportunities i.e., Rivernorth Opportunities and Dodge Cox go up and down completely randomly.

Pair Corralation between Rivernorth Opportunities and Dodge Cox

Considering the 90-day investment horizon Rivernorth Opportunities is expected to generate 1.53 times more return on investment than Dodge Cox. However, Rivernorth Opportunities is 1.53 times more volatile than Dodge Stock Fund. It trades about 0.21 of its potential returns per unit of risk. Dodge Stock Fund is currently generating about 0.28 per unit of risk. If you would invest  1,170  in Rivernorth Opportunities on October 20, 2024 and sell it today you would earn a total of  55.00  from holding Rivernorth Opportunities or generate 4.7% return on investment over 90 days.

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

Rivernorth Opportunities  vs.  Dodge Stock Fund

Rivernorth Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rivernorth Opportunities has generated negative risk-adjusted returns adding no value to fund investors. 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.

Dodge Stock Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dodge Cox is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rivernorth Opportunities and Dodge Cox

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

The idea behind Rivernorth Opportunities and Dodge Stock Fund 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.