Correlation Between RIV Capital and Maven Brands

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

By analyzing existing cross correlation between RIV Capital and Maven Brands, you can compare the effects of market volatilities on RIV Capital and Maven Brands 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 Maven Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of RIV Capital and Maven Brands.

Diversification Opportunities for RIV Capital and Maven Brands

0.26

Correlation Coefficient

RIV Capital  Maven Brands

Modest diversification

The 3 months correlation between RIV and Maven is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding RIV Capital and Maven Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maven Brands 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 Maven Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maven Brands has no effect on the direction of RIV Capital i.e., RIV Capital and Maven Brands go up and down completely randomly.

Pair Corralation between RIV Capital and Maven Brands

Assuming the 90 days horizon RIV Capital is expected to under-perform the Maven Brands. But the pink sheet apears to be less risky and, when comparing its historical volatility, RIV Capital is 14.42 times less risky than Maven Brands. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Maven Brands is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Maven Brands on September 16, 2024 and sell it today you would lose (0.01) from holding Maven Brands or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

RIV Capital  vs.  Maven Brands

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.

Maven Brands

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maven Brands are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Maven Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RIV Capital and Maven Brands

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

The idea behind RIV Capital and Maven Brands 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.