Correlation Between Rivernorth Opportunities and Aberdeen Global
Can any of the company-specific risk be diversified away by investing in both Rivernorth Opportunities and Aberdeen Global 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 Aberdeen Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivernorth Opportunities and Aberdeen Global Dynamic, you can compare the effects of market volatilities on Rivernorth Opportunities and Aberdeen Global 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 Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivernorth Opportunities and Aberdeen Global.
Diversification Opportunities for Rivernorth Opportunities and Aberdeen Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rivernorth and Aberdeen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Rivernorth Opportunities and Aberdeen Global Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Dynamic 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 Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Dynamic has no effect on the direction of Rivernorth Opportunities i.e., Rivernorth Opportunities and Aberdeen Global go up and down completely randomly.
Pair Corralation between Rivernorth Opportunities and Aberdeen Global
Considering the 90-day investment horizon Rivernorth Opportunities is expected to generate 0.92 times more return on investment than Aberdeen Global. However, Rivernorth Opportunities is 1.08 times less risky than Aberdeen Global. It trades about -0.03 of its potential returns per unit of risk. Aberdeen Global Dynamic is currently generating about -0.04 per unit of risk. If you would invest 1,240 in Rivernorth Opportunities on August 28, 2024 and sell it today you would lose (5.00) from holding Rivernorth Opportunities or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivernorth Opportunities vs. Aberdeen Global Dynamic
Performance |
| Timeline |
| Rivernorth Opportunities |
| Aberdeen Global Dynamic |
Rivernorth Opportunities and Aberdeen Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivernorth Opportunities and Aberdeen Global
The main advantage of trading using opposite Rivernorth Opportunities and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivernorth Opportunities position performs unexpectedly, Aberdeen Global 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 Aberdeen Global will offset losses from the drop in Aberdeen Global's long position.The idea behind Rivernorth Opportunities and Aberdeen Global Dynamic 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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