Correlation Between Rivernorthoaktree and Rivernorth

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

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

Diversification Opportunities for Rivernorthoaktree and Rivernorth

0.76

Correlation Coefficient

Rivernorthoaktree  Rivernorth

Poor diversification

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

Pair Corralation between Rivernorthoaktree and Rivernorth

Assuming the 90 days horizon Rivernorthoaktree High Income is expected to generate 0.26 times more return on investment than Rivernorth. However, Rivernorthoaktree High Income is 3.84 times less risky than Rivernorth. It trades about -0.27 of its potential returns per unit of risk. Rivernorth E Opportunity is currently generating about -0.14 per unit of risk. If you would invest  889.00  in Rivernorthoaktree High Income on October 7, 2024 and sell it today you would lose (8.00) from holding Rivernorthoaktree High Income or give up 0.9% of portfolio value over 90 days.

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

Rivernorthoaktree High Income  vs.  Rivernorth E Opportunity

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.

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.

Pair Trading with Rivernorthoaktree and Rivernorth

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

The idea behind Rivernorthoaktree High Income and Rivernorth E Opportunity 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.