Correlation Between Blackrock Muniholdings and RiverNorth Managed

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

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

Diversification Opportunities for Blackrock Muniholdings and RiverNorth Managed

0.89

Correlation Coefficient

Blackrock Muniholdings  RiverNorth Managed

Very poor diversification

The 3 months correlation between Blackrock and RiverNorth is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Closed and RiverNorth Managed Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Managed and Blackrock Muniholdings 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 Blackrock Muniholdings Closed 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 Blackrock Muniholdings i.e., Blackrock Muniholdings and RiverNorth Managed go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and RiverNorth Managed

Considering the 90-day investment horizon Blackrock Muniholdings is expected to generate 1.17 times less return on investment than RiverNorth Managed. But when comparing it to its historical volatility, Blackrock Muniholdings Closed is 1.43 times less risky than RiverNorth Managed. It trades about 0.02 of its potential returns per unit of risk. RiverNorth Managed Duration is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,450  in RiverNorth Managed Duration on October 11, 2024 and sell it today you would earn a total of  74.00  from holding RiverNorth Managed Duration or generate 5.1% return on investment over 90 days.

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

Blackrock Muniholdings Closed  vs.  RiverNorth Managed Duration

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniholdings Closed has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest uncertain performance, the Fund's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

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 Blackrock Muniholdings and RiverNorth Managed

The main advantage of trading using opposite Blackrock Muniholdings and RiverNorth Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniholdings 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 Blackrock Muniholdings Closed 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.