Correlation Between Guggenheim Active and RiverNorth Flexible

Can any of the company-specific risk be diversified away by investing in both Guggenheim 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 Guggenheim 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 Guggenheim Active Allocation and RiverNorth Flexible Municipalome, you can compare the effects of market volatilities on Guggenheim 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 Guggenheim Active with a short position of RiverNorth Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Active and RiverNorth Flexible.

Diversification Opportunities for Guggenheim Active and RiverNorth Flexible

0.71

Correlation Coefficient

Guggenheim Active  RiverNorth Flexible

Poor diversification

The 3 months correlation between Guggenheim and RiverNorth is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Active Allocation and RiverNorth Flexible Municipalo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Flexible and Guggenheim 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 Guggenheim Active Allocation 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 Guggenheim Active i.e., Guggenheim Active and RiverNorth Flexible go up and down completely randomly.

Pair Corralation between Guggenheim Active and RiverNorth Flexible

Considering the 90-day investment horizon Guggenheim Active Allocation is expected to generate 1.4 times more return on investment than RiverNorth Flexible. However, Guggenheim Active is 1.4 times more volatile than RiverNorth Flexible Municipalome. It trades about 0.11 of its potential returns per unit of risk. RiverNorth Flexible Municipalome is currently generating about 0.09 per unit of risk. If you would invest  1,269  in Guggenheim Active Allocation on September 4, 2024 and sell it today you would earn a total of  306.00  from holding Guggenheim Active Allocation or generate 24.11% return on investment over 90 days.

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

Guggenheim Active Allocation  vs.  RiverNorth Flexible Municipalo

Guggenheim Active

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Active Allocation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RiverNorth Flexible

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Flexible Municipalome are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, RiverNorth Flexible is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Guggenheim Active and RiverNorth Flexible

The main advantage of trading using opposite Guggenheim Active and RiverNorth Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim 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 Guggenheim Active Allocation 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.