Correlation Between Aberdeen Income and Rivernorth Opportunities

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

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

Diversification Opportunities for Aberdeen Income and Rivernorth Opportunities

0.79

Correlation Coefficient

Aberdeen Income  Rivernorth Opportunities

Poor diversification

The 3 months correlation between Aberdeen and Rivernorth is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Income Credit and Rivernorth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivernorth Opportunities and Aberdeen Income 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 Aberdeen Income Credit are associated (or correlated) with Rivernorth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivernorth Opportunities has no effect on the direction of Aberdeen Income i.e., Aberdeen Income and Rivernorth Opportunities go up and down completely randomly.

Pair Corralation between Aberdeen Income and Rivernorth Opportunities

Considering the 90-day investment horizon Aberdeen Income is expected to generate 1.07 times less return on investment than Rivernorth Opportunities. But when comparing it to its historical volatility, Aberdeen Income Credit is 1.53 times less risky than Rivernorth Opportunities. It trades about 0.27 of its potential returns per unit of risk. Rivernorth Opportunities is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,235  in Rivernorth Opportunities on September 4, 2024 and sell it today you would earn a total of  31.00  from holding Rivernorth Opportunities or generate 2.51% return on investment over 90 days.

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

Aberdeen Income Credit  vs.  Rivernorth Opportunities

Aberdeen Income Credit

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Income Credit are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable fundamental indicators, Aberdeen Income is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Rivernorth Opportunities

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rivernorth Opportunities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable forward indicators, Rivernorth Opportunities is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aberdeen Income and Rivernorth Opportunities

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

The idea behind Aberdeen Income Credit and Rivernorth Opportunities 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.