Correlation Between RIV Capital and AYR Strategies

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

By analyzing existing cross correlation between RIV Capital and AYR Strategies Class, you can compare the effects of market volatilities on RIV Capital and AYR Strategies 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 RIV Capital with a short position of AYR Strategies. Check out your portfolio center. Please also check ongoing floating volatility patterns of RIV Capital and AYR Strategies.

Diversification Opportunities for RIV Capital and AYR Strategies

0.87

Correlation Coefficient

RIV Capital  AYR Strategies

Very poor diversification

The 3 months correlation between RIV and AYR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding RIV Capital and AYR Strategies Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AYR Strategies Class and RIV Capital 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 RIV Capital are associated (or correlated) with AYR Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AYR Strategies Class has no effect on the direction of RIV Capital i.e., RIV Capital and AYR Strategies go up and down completely randomly.

Pair Corralation between RIV Capital and AYR Strategies

Assuming the 90 days horizon RIV Capital is expected to generate 1.05 times more return on investment than AYR Strategies. However, RIV Capital is 1.05 times more volatile than AYR Strategies Class. It trades about 0.03 of its potential returns per unit of risk. AYR Strategies Class is currently generating about -0.03 per unit of risk. If you would invest  8.40  in RIV Capital on September 19, 2024 and sell it today you would lose (0.90) from holding RIV Capital or give up 10.71% of portfolio value over 90 days.

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

RIV Capital  vs.  AYR Strategies Class

RIV Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RIV Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AYR Strategies Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AYR Strategies Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RIV Capital and AYR Strategies

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

The idea behind RIV Capital and AYR Strategies Class 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.