Correlation Between RiverNorth Flexible and Western Asset

Can any of the company-specific risk be diversified away by investing in both RiverNorth Flexible and Western Asset 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 Western Asset 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 Western Asset High, you can compare the effects of market volatilities on RiverNorth Flexible and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorth Flexible and Western Asset.

Diversification Opportunities for RiverNorth Flexible and Western Asset

0.09

Correlation Coefficient

RiverNorth Flexible  Western Asset

Significant diversification

The 3 months correlation between RiverNorth and Western is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Flexible Municipalo and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of RiverNorth Flexible i.e., RiverNorth Flexible and Western Asset go up and down completely randomly.

Pair Corralation between RiverNorth Flexible and Western Asset

Considering the 90-day investment horizon RiverNorth Flexible Municipalome is expected to under-perform the Western Asset. But the etf apears to be less risky and, when comparing its historical volatility, RiverNorth Flexible Municipalome is 1.75 times less risky than Western Asset. The etf trades about -0.02 of its potential returns per unit of risk. The Western Asset High is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  434.00  in Western Asset High on September 19, 2024 and sell it today you would lose (1.00) from holding Western Asset High or give up 0.23% of portfolio value over 90 days.

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

RiverNorth Flexible Municipalo  vs.  Western Asset High

RiverNorth Flexible

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RiverNorth Flexible Municipalome has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Western Asset High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Western Asset is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RiverNorth Flexible and Western Asset

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

The idea behind RiverNorth Flexible Municipalome and Western Asset High 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 Stocks Directory module to find actively traded stocks across global markets.