Correlation Between Queen City and RiverNorth Managed

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

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

Diversification Opportunities for Queen City and RiverNorth Managed

0.65

Correlation Coefficient

Queen City  RiverNorth Managed

Poor diversification

The 3 months correlation between Queen and RiverNorth is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Queen City Investments and RiverNorth Managed Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Managed and Queen City 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 Queen City Investments 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 Queen City i.e., Queen City and RiverNorth Managed go up and down completely randomly.

Pair Corralation between Queen City and RiverNorth Managed

Given the investment horizon of 90 days Queen City Investments is expected to under-perform the RiverNorth Managed. In addition to that, Queen City is 2.97 times more volatile than RiverNorth Managed Duration. It trades about -0.21 of its total potential returns per unit of risk. RiverNorth Managed Duration is currently generating about -0.38 per unit of volatility. If you would invest  1,568  in RiverNorth Managed Duration on October 9, 2024 and sell it today you would lose (87.00) from holding RiverNorth Managed Duration or give up 5.55% of portfolio value over 90 days.

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

Queen City Investments  vs.  RiverNorth Managed Duration

Queen City Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Queen City Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Queen City is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 very healthy primary indicators, RiverNorth Managed is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Queen City and RiverNorth Managed

The main advantage of trading using opposite Queen City and RiverNorth Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Queen City 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 Queen City Investments 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.

Check out your portfolio center.

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.