Correlation Between Guggenheim Active and Rivernorth Opportunistic

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

By analyzing existing cross correlation between Guggenheim Active Allocation and Rivernorth Opportunistic Municipalome, you can compare the effects of market volatilities on Guggenheim Active 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 Guggenheim Active with a short position of Rivernorth Opportunistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Active and Rivernorth Opportunistic.

Diversification Opportunities for Guggenheim Active and Rivernorth Opportunistic

0.58

Correlation Coefficient

Guggenheim Active  Rivernorth Opportunistic

Very weak diversification

The 3 months correlation between Guggenheim and Rivernorth is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Active Allocation and Rivernorth Opportunistic Munic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivernorth Opportunistic and Guggenheim Active 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 Guggenheim Active Allocation 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 Guggenheim Active i.e., Guggenheim Active and Rivernorth Opportunistic go up and down completely randomly.

Pair Corralation between Guggenheim Active and Rivernorth Opportunistic

Considering the 90-day investment horizon Guggenheim Active is expected to generate 1.59 times less return on investment than Rivernorth Opportunistic. In addition to that, Guggenheim Active is 1.63 times more volatile than Rivernorth Opportunistic Municipalome. It trades about 0.03 of its total potential returns per unit of risk. Rivernorth Opportunistic Municipalome is currently generating about 0.09 per unit of volatility. If you would invest  1,561  in Rivernorth Opportunistic Municipalome on September 3, 2024 and sell it today you would earn a total of  43.00  from holding Rivernorth Opportunistic Municipalome or generate 2.75% return on investment over 90 days.

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

Guggenheim Active Allocation  vs.  Rivernorth Opportunistic Munic

Guggenheim Active

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Active Allocation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Rivernorth Opportunistic

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rivernorth Opportunistic Municipalome are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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 Guggenheim Active and Rivernorth Opportunistic

The main advantage of trading using opposite Guggenheim Active and Rivernorth Opportunistic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Active 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 Guggenheim Active Allocation 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.