Correlation Between Fidelity Mid and Rivernorth Opportunities

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

By analyzing existing cross correlation between Fidelity Mid Cap and Rivernorth Opportunities, you can compare the effects of market volatilities on Fidelity Mid and Rivernorth Opportunities 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 Fidelity Mid with a short position of Rivernorth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Mid and Rivernorth Opportunities.

Diversification Opportunities for Fidelity Mid and Rivernorth Opportunities

0.55

Correlation Coefficient

Fidelity Mid  Rivernorth Opportunities

Very weak diversification

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

Pair Corralation between Fidelity Mid and Rivernorth Opportunities

Assuming the 90 days horizon Fidelity Mid Cap is expected to under-perform the Rivernorth Opportunities. In addition to that, Fidelity Mid is 1.91 times more volatile than Rivernorth Opportunities. It trades about -0.22 of its total potential returns per unit of risk. Rivernorth Opportunities is currently generating about 0.28 per unit of volatility. If you would invest  1,201  in Rivernorth Opportunities on December 4, 2024 and sell it today you would earn a total of  29.00  from holding Rivernorth Opportunities or generate 2.41% return on investment over 90 days.

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

Fidelity Mid Cap  vs.  Rivernorth Opportunities

Fidelity Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Rivernorth Opportunities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rivernorth Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable forward indicators, Rivernorth Opportunities is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fidelity Mid and Rivernorth Opportunities

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

The idea behind Fidelity Mid Cap and Rivernorth Opportunities 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.