Correlation Between Rivernorth and Rivernorthoaktree

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

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

Diversification Opportunities for Rivernorth and Rivernorthoaktree

0.76

Correlation Coefficient

Rivernorth  Rivernorthoaktree

Poor diversification

The 3 months correlation between Rivernorth and Rivernorthoaktree is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rivernorth E Opportunity and Rivernorthoaktree High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivernorthoaktree High and Rivernorth 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 E Opportunity are associated (or correlated) with Rivernorthoaktree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivernorthoaktree High has no effect on the direction of Rivernorth i.e., Rivernorth and Rivernorthoaktree go up and down completely randomly.

Pair Corralation between Rivernorth and Rivernorthoaktree

Assuming the 90 days horizon Rivernorth E Opportunity is expected to generate 2.36 times more return on investment than Rivernorthoaktree. However, Rivernorth is 2.36 times more volatile than Rivernorthoaktree High Income. It trades about 0.09 of its potential returns per unit of risk. Rivernorthoaktree High Income is currently generating about 0.14 per unit of risk. If you would invest  619.00  in Rivernorth E Opportunity on October 11, 2024 and sell it today you would earn a total of  145.00  from holding Rivernorth E Opportunity or generate 23.42% return on investment over 90 days.

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

Rivernorth E Opportunity  vs.  Rivernorthoaktree High Income

Rivernorth E Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rivernorth E Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rivernorth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rivernorthoaktree High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rivernorthoaktree High Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rivernorthoaktree 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 and Rivernorthoaktree

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

The idea behind Rivernorth E Opportunity and Rivernorthoaktree High Income 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.