Correlation Between RiverNorth Managed and RiverNorth Flexible

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

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

Diversification Opportunities for RiverNorth Managed and RiverNorth Flexible

0.93

Correlation Coefficient

RiverNorth Managed  RiverNorth Flexible

Almost no diversification

The 3 months correlation between RiverNorth and RiverNorth is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Managed Duration and RiverNorth Flexible Municipalo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Flexible and RiverNorth Managed 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 Managed Duration are associated (or correlated) with RiverNorth Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverNorth Flexible has no effect on the direction of RiverNorth Managed i.e., RiverNorth Managed and RiverNorth Flexible go up and down completely randomly.

Pair Corralation between RiverNorth Managed and RiverNorth Flexible

Given the investment horizon of 90 days RiverNorth Managed Duration is expected to generate 1.22 times more return on investment than RiverNorth Flexible. However, RiverNorth Managed is 1.22 times more volatile than RiverNorth Flexible Municipalome. It trades about -0.03 of its potential returns per unit of risk. RiverNorth Flexible Municipalome is currently generating about -0.04 per unit of risk. If you would invest  1,570  in RiverNorth Managed Duration on October 24, 2024 and sell it today you would lose (19.00) from holding RiverNorth Managed Duration or give up 1.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

RiverNorth Managed Duration  vs.  RiverNorth Flexible Municipalo

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

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.

Pair Trading with RiverNorth Managed and RiverNorth Flexible

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

The idea behind RiverNorth Managed Duration and RiverNorth Flexible Municipalome 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.