Correlation Between RiverNorth Flexible and Federated Investors

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

By analyzing existing cross correlation between RiverNorth Flexible Municipalome and Federated Investors B, you can compare the effects of market volatilities on RiverNorth Flexible and Federated Investors 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 RiverNorth Flexible with a short position of Federated Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorth Flexible and Federated Investors.

Diversification Opportunities for RiverNorth Flexible and Federated Investors

-0.59

Correlation Coefficient

RiverNorth Flexible  Federated Investors

Excellent diversification

The 3 months correlation between RiverNorth and Federated is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Flexible Municipalo and Federated Investors B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Investors and RiverNorth Flexible 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 RiverNorth Flexible Municipalome are associated (or correlated) with Federated Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Investors has no effect on the direction of RiverNorth Flexible i.e., RiverNorth Flexible and Federated Investors go up and down completely randomly.

Pair Corralation between RiverNorth Flexible and Federated Investors

Considering the 90-day investment horizon RiverNorth Flexible Municipalome is expected to generate 0.39 times more return on investment than Federated Investors. However, RiverNorth Flexible Municipalome is 2.58 times less risky than Federated Investors. It trades about 0.06 of its potential returns per unit of risk. Federated Investors B is currently generating about 0.01 per unit of risk. If you would invest  1,458  in RiverNorth Flexible Municipalome on December 30, 2024 and sell it today you would earn a total of  25.00  from holding RiverNorth Flexible Municipalome or generate 1.71% return on investment over 90 days.

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

RiverNorth Flexible Municipalo  vs.  Federated Investors B

RiverNorth Flexible

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Flexible Municipalome are ranked lower than 4 (%) 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.

Federated Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federated Investors B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Federated Investors is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with RiverNorth Flexible and Federated Investors

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

The idea behind RiverNorth Flexible Municipalome and Federated Investors B 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.