Correlation Between Rivernorth Opportunistic and Northern Lights

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

By analyzing existing cross correlation between Rivernorth Opportunistic Municipalome and Northern Lights, you can compare the effects of market volatilities on Rivernorth Opportunistic and Northern Lights 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 Opportunistic with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivernorth Opportunistic and Northern Lights.

Diversification Opportunities for Rivernorth Opportunistic and Northern Lights

0.18

Correlation Coefficient

Rivernorth Opportunistic  Northern Lights

Average diversification

The 3 months correlation between Rivernorth and Northern is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Rivernorth Opportunistic Munic and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Rivernorth Opportunistic 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 Opportunistic Municipalome are associated (or correlated) with Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Rivernorth Opportunistic i.e., Rivernorth Opportunistic and Northern Lights go up and down completely randomly.

Pair Corralation between Rivernorth Opportunistic and Northern Lights

Considering the 90-day investment horizon Rivernorth Opportunistic Municipalome is expected to generate 2.77 times more return on investment than Northern Lights. However, Rivernorth Opportunistic is 2.77 times more volatile than Northern Lights. It trades about 0.11 of its potential returns per unit of risk. Northern Lights is currently generating about -0.07 per unit of risk. If you would invest  1,459  in Rivernorth Opportunistic Municipalome on December 27, 2024 and sell it today you would earn a total of  51.00  from holding Rivernorth Opportunistic Municipalome or generate 3.5% return on investment over 90 days.

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

Rivernorth Opportunistic Munic  vs.  Northern Lights

Rivernorth Opportunistic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rivernorth Opportunistic Municipalome are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong primary indicators, Rivernorth Opportunistic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Northern Lights

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Lights has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Northern Lights is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rivernorth Opportunistic and Northern Lights

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

The idea behind Rivernorth Opportunistic Municipalome and Northern Lights 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.