Correlation Between RiverNorth Specialty and Rivernorth Opportunistic

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

Diversification Opportunities for RiverNorth Specialty and Rivernorth Opportunistic

0.07

Correlation Coefficient

RiverNorth Specialty  Rivernorth Opportunistic

Significant diversification

The 3 months correlation between RiverNorth and Rivernorth is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Specialty Finance and Rivernorth Opportunistic Munic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivernorth Opportunistic 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 Rivernorth Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivernorth Opportunistic has no effect on the direction of RiverNorth Specialty i.e., RiverNorth Specialty and Rivernorth Opportunistic go up and down completely randomly.

Pair Corralation between RiverNorth Specialty and Rivernorth Opportunistic

Considering the 90-day investment horizon RiverNorth Specialty is expected to generate 1.06 times less return on investment than Rivernorth Opportunistic. But when comparing it to its historical volatility, RiverNorth Specialty Finance is 1.62 times less risky than Rivernorth Opportunistic. It trades about 0.1 of its potential returns per unit of risk. Rivernorth Opportunistic Municipalome is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,411  in Rivernorth Opportunistic Municipalome on September 14, 2024 and sell it today you would earn a total of  161.00  from holding Rivernorth Opportunistic Municipalome or generate 11.41% return on investment over 90 days.

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

RiverNorth Specialty Finance  vs.  Rivernorth Opportunistic Munic

RiverNorth Specialty

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Specialty Finance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RiverNorth Specialty is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Rivernorth Opportunistic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rivernorth Opportunistic Municipalome has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with RiverNorth Specialty and Rivernorth Opportunistic

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

The idea behind RiverNorth Specialty Finance and Rivernorth Opportunistic 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..