Correlation Between Agriculture Natural and RiverNorth Managed

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

By analyzing existing cross correlation between Agriculture Natural Solutions and RiverNorth Managed Duration, you can compare the effects of market volatilities on Agriculture Natural and RiverNorth Managed 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 Agriculture Natural with a short position of RiverNorth Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agriculture Natural and RiverNorth Managed.

Diversification Opportunities for Agriculture Natural and RiverNorth Managed

-0.03

Correlation Coefficient

Agriculture Natural  RiverNorth Managed

Good diversification

The 3 months correlation between Agriculture and RiverNorth is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Agriculture Natural Solutions and RiverNorth Managed Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Managed and Agriculture Natural 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 Agriculture Natural Solutions are associated (or correlated) with RiverNorth Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverNorth Managed has no effect on the direction of Agriculture Natural i.e., Agriculture Natural and RiverNorth Managed go up and down completely randomly.

Pair Corralation between Agriculture Natural and RiverNorth Managed

Assuming the 90 days horizon Agriculture Natural Solutions is expected to generate 13.56 times more return on investment than RiverNorth Managed. However, Agriculture Natural is 13.56 times more volatile than RiverNorth Managed Duration. It trades about 0.07 of its potential returns per unit of risk. RiverNorth Managed Duration is currently generating about -0.14 per unit of risk. If you would invest  27.00  in Agriculture Natural Solutions on October 10, 2024 and sell it today you would earn a total of  3.00  from holding Agriculture Natural Solutions or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.65%
Values	Daily Returns

Agriculture Natural Solutions  vs.  RiverNorth Managed Duration

Agriculture Natural

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agriculture Natural Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Agriculture Natural showed solid returns over the last few months and may actually be approaching a breakup point.

RiverNorth Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RiverNorth Managed Duration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, RiverNorth Managed is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agriculture Natural and RiverNorth Managed

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

The idea behind Agriculture Natural Solutions and RiverNorth Managed Duration 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.