Correlation Between RiverNorth Flexible and IHIT

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

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

Diversification Opportunities for RiverNorth Flexible and IHIT

-0.23

Correlation Coefficient

RiverNorth Flexible  IHIT

Very good diversification

The 3 months correlation between RiverNorth and IHIT is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Flexible Municipalo and IHIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHIT and RiverNorth Flexible 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 Flexible Municipalome are associated (or correlated) with IHIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHIT has no effect on the direction of RiverNorth Flexible i.e., RiverNorth Flexible and IHIT go up and down completely randomly.

Pair Corralation between RiverNorth Flexible and IHIT

Given the investment horizon of 90 days RiverNorth Flexible Municipalome is expected to generate 1.64 times more return on investment than IHIT. However, RiverNorth Flexible is 1.64 times more volatile than IHIT. It trades about 0.05 of its potential returns per unit of risk. IHIT is currently generating about -0.07 per unit of risk. If you would invest  1,172  in RiverNorth Flexible Municipalome on September 3, 2024 and sell it today you would earn a total of  255.00  from holding RiverNorth Flexible Municipalome or generate 21.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.71%
Values	Daily Returns

RiverNorth Flexible Municipalo  vs.  IHIT

RiverNorth Flexible

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Flexible Municipalome are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

IHIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IHIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, IHIT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RiverNorth Flexible and IHIT

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

The idea behind RiverNorth Flexible Municipalome and IHIT 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.