Correlation Between Origin Materials and RiverNorth Specialty

Can any of the company-specific risk be diversified away by investing in both Origin Materials and RiverNorth Specialty 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 Origin Materials and RiverNorth Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Origin Materials and RiverNorth Specialty Finance, you can compare the effects of market volatilities on Origin Materials and RiverNorth Specialty 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 Origin Materials with a short position of RiverNorth Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and RiverNorth Specialty.

Diversification Opportunities for Origin Materials and RiverNorth Specialty

0.32

Correlation Coefficient

Origin Materials  RiverNorth Specialty

Weak diversification

The 3 months correlation between Origin and RiverNorth is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and RiverNorth Specialty Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Specialty and Origin Materials 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 Origin Materials are associated (or correlated) with RiverNorth Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverNorth Specialty has no effect on the direction of Origin Materials i.e., Origin Materials and RiverNorth Specialty go up and down completely randomly.

Pair Corralation between Origin Materials and RiverNorth Specialty

Given the investment horizon of 90 days Origin Materials is expected to generate 145.61 times more return on investment than RiverNorth Specialty. However, Origin Materials is 145.61 times more volatile than RiverNorth Specialty Finance. It trades about 0.12 of its potential returns per unit of risk. RiverNorth Specialty Finance is currently generating about 0.4 per unit of risk. If you would invest  87.00  in Origin Materials on August 9, 2024 and sell it today you would earn a total of  39.00  from holding Origin Materials or generate 44.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Origin Materials  vs.  RiverNorth Specialty Finance

Origin Materials

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Materials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Origin Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

RiverNorth Specialty

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Specialty Finance are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, RiverNorth Specialty is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Origin Materials and RiverNorth Specialty

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

The idea behind Origin Materials and RiverNorth Specialty Finance 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.