Correlation Between BlackRock Core and RiverNorth Flexible

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

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

Diversification Opportunities for BlackRock Core and RiverNorth Flexible

0.54

Correlation Coefficient

BlackRock Core  RiverNorth Flexible

Very weak diversification

The 3 months correlation between BlackRock and RiverNorth is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Core Bond and RiverNorth Flexible Municipalo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Flexible and BlackRock Core 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 BlackRock Core Bond 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 BlackRock Core i.e., BlackRock Core and RiverNorth Flexible go up and down completely randomly.

Pair Corralation between BlackRock Core and RiverNorth Flexible

Considering the 90-day investment horizon BlackRock Core Bond is expected to under-perform the RiverNorth Flexible. In addition to that, BlackRock Core is 1.6 times more volatile than RiverNorth Flexible Municipalome. It trades about -0.09 of its total potential returns per unit of risk. RiverNorth Flexible Municipalome is currently generating about -0.01 per unit of volatility. If you would invest  1,602  in RiverNorth Flexible Municipalome on September 12, 2024 and sell it today you would lose (5.00) from holding RiverNorth Flexible Municipalome or give up 0.31% of portfolio value over 90 days.

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

BlackRock Core Bond  vs.  RiverNorth Flexible Municipalo

BlackRock Core Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Core Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, BlackRock Core is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

RiverNorth Flexible

Risk-Adjusted Performance

0 of 100

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 BlackRock Core and RiverNorth Flexible

The main advantage of trading using opposite BlackRock Core and RiverNorth Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Core 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 BlackRock Core Bond 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.