Correlation Between 1933 Industries and RIV Capital

Can any of the company-specific risk be diversified away by investing in both 1933 Industries and RIV Capital 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 1933 Industries and RIV Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1933 Industries and RIV Capital, you can compare the effects of market volatilities on 1933 Industries and RIV Capital 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 1933 Industries with a short position of RIV Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1933 Industries and RIV Capital.

Diversification Opportunities for 1933 Industries and RIV Capital

0.73

Correlation Coefficient

1933 Industries  RIV Capital

Poor diversification

The 3 months correlation between 1933 and RIV is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding 1933 Industries and RIV Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RIV Capital and 1933 Industries 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 1933 Industries are associated (or correlated) with RIV Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RIV Capital has no effect on the direction of 1933 Industries i.e., 1933 Industries and RIV Capital go up and down completely randomly.

Pair Corralation between 1933 Industries and RIV Capital

Assuming the 90 days horizon 1933 Industries is expected to generate 1.93 times more return on investment than RIV Capital. However, 1933 Industries is 1.93 times more volatile than RIV Capital. It trades about 0.02 of its potential returns per unit of risk. RIV Capital is currently generating about -0.11 per unit of risk. If you would invest  0.80  in 1933 Industries on September 19, 2024 and sell it today you would lose (0.32) from holding 1933 Industries or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

1933 Industries  vs.  RIV Capital

1933 Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 1933 Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, 1933 Industries reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with 1933 Industries and RIV Capital

The main advantage of trading using opposite 1933 Industries and RIV Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1933 Industries position performs unexpectedly, RIV Capital 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 RIV Capital will offset losses from the drop in RIV Capital's long position.

The idea behind 1933 Industries and RIV Capital 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.