Correlation Between FlexShares Ready and RiverFront Strategic

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

By analyzing existing cross correlation between FlexShares Ready Access and RiverFront Strategic Income, you can compare the effects of market volatilities on FlexShares Ready and RiverFront Strategic 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 FlexShares Ready with a short position of RiverFront Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Ready and RiverFront Strategic.

Diversification Opportunities for FlexShares Ready and RiverFront Strategic

0.32

Correlation Coefficient

FlexShares Ready  RiverFront Strategic

Weak diversification

The 3 months correlation between FlexShares and RiverFront is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Ready Access and RiverFront Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverFront Strategic and FlexShares Ready 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 FlexShares Ready Access are associated (or correlated) with RiverFront Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverFront Strategic has no effect on the direction of FlexShares Ready i.e., FlexShares Ready and RiverFront Strategic go up and down completely randomly.

Pair Corralation between FlexShares Ready and RiverFront Strategic

Given the investment horizon of 90 days FlexShares Ready is expected to generate 2.53 times less return on investment than RiverFront Strategic. But when comparing it to its historical volatility, FlexShares Ready Access is 29.33 times less risky than RiverFront Strategic. It trades about 0.75 of its potential returns per unit of risk. RiverFront Strategic Income is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,253  in RiverFront Strategic Income on December 29, 2024 and sell it today you would earn a total of  66.00  from holding RiverFront Strategic Income or generate 2.93% return on investment over 90 days.

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

FlexShares Ready Access  vs.  RiverFront Strategic Income

FlexShares Ready Access

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Ready Access are ranked lower than 58 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, FlexShares Ready is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

RiverFront Strategic

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RiverFront Strategic Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, RiverFront Strategic is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FlexShares Ready and RiverFront Strategic

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

The idea behind FlexShares Ready Access and RiverFront Strategic Income 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.