Correlation Between RiverNorth Specialty and First Internet
Can any of the company-specific risk be diversified away by investing in both RiverNorth Specialty and First Internet 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 Specialty and First Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RiverNorth Specialty Finance and First Internet Bancorp, you can compare the effects of market volatilities on RiverNorth Specialty and First Internet 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 Specialty with a short position of First Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorth Specialty and First Internet.
Diversification Opportunities for RiverNorth Specialty and First Internet
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RiverNorth and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Specialty Finance and First Internet Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Internet Bancorp and RiverNorth Specialty 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 Specialty Finance are associated (or correlated) with First Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Internet Bancorp has no effect on the direction of RiverNorth Specialty i.e., RiverNorth Specialty and First Internet go up and down completely randomly.
Pair Corralation between RiverNorth Specialty and First Internet
Considering the 90-day investment horizon RiverNorth Specialty Finance is expected to generate 1.18 times more return on investment than First Internet. However, RiverNorth Specialty is 1.18 times more volatile than First Internet Bancorp. It trades about 0.08 of its potential returns per unit of risk. First Internet Bancorp is currently generating about 0.0 per unit of risk. If you would invest 1,499 in RiverNorth Specialty Finance on December 5, 2024 and sell it today you would earn a total of 11.00 from holding RiverNorth Specialty Finance or generate 0.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
RiverNorth Specialty Finance vs. First Internet Bancorp
Performance |
Timeline |
RiverNorth Specialty |
First Internet Bancorp |
RiverNorth Specialty and First Internet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RiverNorth Specialty and First Internet
The main advantage of trading using opposite RiverNorth Specialty and First Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverNorth Specialty position performs unexpectedly, First Internet 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 First Internet will offset losses from the drop in First Internet's long position.The idea behind RiverNorth Specialty Finance and First Internet Bancorp 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.
Check out your portfolio center.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.
Other Complementary Tools
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |