Correlation Between Rivernorth Opportunities and Main Street

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

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

Diversification Opportunities for Rivernorth Opportunities and Main Street

0.55

Correlation Coefficient

Rivernorth Opportunities  Main Street

Very weak diversification

The 3 months correlation between Rivernorth and Main is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rivernorth Opportunities 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 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 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 Rivernorth Opportunities i.e., Rivernorth Opportunities and Main Street go up and down completely randomly.

Pair Corralation between Rivernorth Opportunities and Main Street

Considering the 90-day investment horizon Rivernorth Opportunities is expected to generate 1.51 times less return on investment than Main Street. But when comparing it to its historical volatility, Rivernorth Opportunities is 1.13 times less risky than Main Street. It trades about 0.12 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  3,413  in Main Street Capital on September 9, 2024 and sell it today you would earn a total of  2,116  from holding Main Street Capital or generate 62.0% return on investment over 90 days.

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

Rivernorth Opportunities  vs.  Main Street 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.

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 Rivernorth Opportunities and Main Street

The main advantage of trading using opposite Rivernorth Opportunities and Main Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivernorth Opportunities 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 Rivernorth Opportunities 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.