Correlation Between Barings Active and Rivernorth Flexible

Can any of the company-specific risk be diversified away by investing in both Barings Active and Rivernorth Flexible 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 Barings Active and Rivernorth Flexible into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barings Active Short and Rivernorth Flexible Municipalome, you can compare the effects of market volatilities on Barings Active and Rivernorth Flexible 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 Barings Active with a short position of Rivernorth Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Rivernorth Flexible.

Diversification Opportunities for Barings Active and Rivernorth Flexible

0.55

Correlation Coefficient

Barings Active  Rivernorth Flexible

Very weak diversification

The 3 months correlation between Barings and Rivernorth is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Rivernorth Flexible Municipalo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivernorth Flexible and Barings Active 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 Barings Active Short are associated (or correlated) with Rivernorth Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivernorth Flexible has no effect on the direction of Barings Active i.e., Barings Active and Rivernorth Flexible go up and down completely randomly.

Pair Corralation between Barings Active and Rivernorth Flexible

Assuming the 90 days horizon Barings Active is expected to generate 3.02 times less return on investment than Rivernorth Flexible. But when comparing it to its historical volatility, Barings Active Short is 3.32 times less risky than Rivernorth Flexible. It trades about 0.1 of its potential returns per unit of risk. Rivernorth Flexible Municipalome is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,704  in Rivernorth Flexible Municipalome on September 5, 2024 and sell it today you would earn a total of  39.00  from holding Rivernorth Flexible Municipalome or generate 2.29% return on investment over 90 days.

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

Barings Active Short  vs.  Rivernorth Flexible Municipalo

Barings Active Short

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Active Short are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rivernorth Flexible

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rivernorth Flexible Municipalome are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Rivernorth Flexible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barings Active and Rivernorth Flexible

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

The idea behind Barings Active Short and Rivernorth Flexible Municipalome 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.