Correlation Between RiverNorthDoubleLine and Special Opportunities
Can any of the company-specific risk be diversified away by investing in both RiverNorthDoubleLine and Special Opportunities 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 RiverNorthDoubleLine and Special Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RiverNorthDoubleLine Strategic Opportunity and Special Opportunities Closed, you can compare the effects of market volatilities on RiverNorthDoubleLine and Special Opportunities 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 RiverNorthDoubleLine with a short position of Special Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorthDoubleLine and Special Opportunities.
Diversification Opportunities for RiverNorthDoubleLine and Special Opportunities
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RiverNorthDoubleLine and Special is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorthDoubleLine Strategic and Special Opportunities Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Special Opportunities and RiverNorthDoubleLine 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 RiverNorthDoubleLine Strategic Opportunity are associated (or correlated) with Special Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Special Opportunities has no effect on the direction of RiverNorthDoubleLine i.e., RiverNorthDoubleLine and Special Opportunities go up and down completely randomly.
Pair Corralation between RiverNorthDoubleLine and Special Opportunities
Considering the 90-day investment horizon RiverNorthDoubleLine is expected to generate 4.25 times less return on investment than Special Opportunities. But when comparing it to its historical volatility, RiverNorthDoubleLine Strategic Opportunity is 1.15 times less risky than Special Opportunities. It trades about 0.12 of its potential returns per unit of risk. Special Opportunities Closed is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 1,460 in Special Opportunities Closed on November 2, 2024 and sell it today you would earn a total of 85.00 from holding Special Opportunities Closed or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RiverNorthDoubleLine Strategic vs. Special Opportunities Closed
Performance |
| Timeline |
| RiverNorthDoubleLine |
| Special Opportunities |
RiverNorthDoubleLine and Special Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RiverNorthDoubleLine and Special Opportunities
The main advantage of trading using opposite RiverNorthDoubleLine and Special Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverNorthDoubleLine position performs unexpectedly, Special Opportunities 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 Special Opportunities will offset losses from the drop in Special Opportunities' long position.The idea behind RiverNorthDoubleLine Strategic Opportunity and Special Opportunities Closed 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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Check out your portfolio center.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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