Correlation Between Sprott and RiverNorth Flexible

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

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

Diversification Opportunities for Sprott and RiverNorth Flexible

-0.09

Correlation Coefficient

Sprott  RiverNorth Flexible

Good diversification

The 3 months correlation between Sprott and RiverNorth is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Inc and RiverNorth Flexible Municipalo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Flexible and Sprott 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 Sprott Inc 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 Sprott i.e., Sprott and RiverNorth Flexible go up and down completely randomly.

Pair Corralation between Sprott and RiverNorth Flexible

Considering the 90-day investment horizon Sprott Inc is expected to generate 2.08 times more return on investment than RiverNorth Flexible. However, Sprott is 2.08 times more volatile than RiverNorth Flexible Municipalome. It trades about 0.05 of its potential returns per unit of risk. RiverNorth Flexible Municipalome is currently generating about 0.05 per unit of risk. If you would invest  3,206  in Sprott Inc on September 14, 2024 and sell it today you would earn a total of  1,265  from holding Sprott Inc or generate 39.46% return on investment over 90 days.

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

Sprott Inc  vs.  RiverNorth Flexible Municipalo

Sprott Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Sprott may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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

Pair Trading with Sprott and RiverNorth Flexible

The main advantage of trading using opposite Sprott and RiverNorth Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott 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 Sprott Inc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.