Correlation Between Otis Worldwide and RiverNorth Specialty
Can any of the company-specific risk be diversified away by investing in both Otis Worldwide and RiverNorth Specialty 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 Otis Worldwide and RiverNorth Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otis Worldwide Corp and RiverNorth Specialty Finance, you can compare the effects of market volatilities on Otis Worldwide and RiverNorth Specialty 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 Otis Worldwide with a short position of RiverNorth Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otis Worldwide and RiverNorth Specialty.
Diversification Opportunities for Otis Worldwide and RiverNorth Specialty
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Otis and RiverNorth is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Otis Worldwide Corp and RiverNorth Specialty Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Specialty and Otis Worldwide 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 Otis Worldwide Corp are associated (or correlated) with RiverNorth Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverNorth Specialty has no effect on the direction of Otis Worldwide i.e., Otis Worldwide and RiverNorth Specialty go up and down completely randomly.
Pair Corralation between Otis Worldwide and RiverNorth Specialty
Given the investment horizon of 90 days Otis Worldwide Corp is expected to generate 55.68 times more return on investment than RiverNorth Specialty. However, Otis Worldwide is 55.68 times more volatile than RiverNorth Specialty Finance. It trades about 0.04 of its potential returns per unit of risk. RiverNorth Specialty Finance is currently generating about 0.5 per unit of risk. If you would invest 10,105 in Otis Worldwide Corp on August 28, 2024 and sell it today you would earn a total of 92.00 from holding Otis Worldwide Corp or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 18.18% |
| Values | Daily Returns |
Otis Worldwide Corp vs. RiverNorth Specialty Finance
Performance |
| Timeline |
| Otis Worldwide Corp |
| RiverNorth Specialty |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Excellent
Otis Worldwide and RiverNorth Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otis Worldwide and RiverNorth Specialty
The main advantage of trading using opposite Otis Worldwide and RiverNorth Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otis Worldwide position performs unexpectedly, RiverNorth Specialty 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 Specialty will offset losses from the drop in RiverNorth Specialty's long position.| Otis Worldwide vs. Aquagold International | Otis Worldwide vs. Morningstar Unconstrained Allocation | Otis Worldwide vs. High Yield Municipal Fund | Otis Worldwide vs. Thrivent High Yield |
| RiverNorth Specialty vs. GAMCO Natural Resources | RiverNorth Specialty vs. The Gabelli Multimedia | RiverNorth Specialty vs. Customers Bancorp | RiverNorth Specialty vs. SCE Trust II |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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