Correlation Between Qudian and RiverNorth Managed

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

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

Diversification Opportunities for Qudian and RiverNorth Managed

0.29

Correlation Coefficient

Qudian  RiverNorth Managed

Modest diversification

The 3 months correlation between Qudian and RiverNorth is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and RiverNorth Managed Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Managed and Qudian 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 Qudian Inc 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 Qudian i.e., Qudian and RiverNorth Managed go up and down completely randomly.

Pair Corralation between Qudian and RiverNorth Managed

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 4.33 times more return on investment than RiverNorth Managed. However, Qudian is 4.33 times more volatile than RiverNorth Managed Duration. It trades about 0.03 of its potential returns per unit of risk. RiverNorth Managed Duration is currently generating about 0.07 per unit of risk. If you would invest  289.00  in Qudian Inc on December 20, 2024 and sell it today you would earn a total of  6.00  from holding Qudian Inc or generate 2.08% return on investment over 90 days.

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

Qudian Inc  vs.  RiverNorth Managed Duration

Qudian Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Qudian is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

RiverNorth Managed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Managed Duration are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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 Qudian and RiverNorth Managed

The main advantage of trading using opposite Qudian and RiverNorth Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian 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 Qudian Inc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.