Correlation Between RiverNorth Flexible and Invesco High

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

Diversification Opportunities for RiverNorth Flexible and Invesco High

-0.29

Correlation Coefficient

RiverNorth Flexible  Invesco High

Very good diversification

The 3 months correlation between RiverNorth and Invesco is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Flexible Municipalo and Invesco High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Income 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 Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Income has no effect on the direction of RiverNorth Flexible i.e., RiverNorth Flexible and Invesco High go up and down completely randomly.

Pair Corralation between RiverNorth Flexible and Invesco High

Given the investment horizon of 90 days RiverNorth Flexible is expected to generate 2.43 times less return on investment than Invesco High. In addition to that, RiverNorth Flexible is 1.63 times more volatile than Invesco High Income. It trades about 0.04 of its total potential returns per unit of risk. Invesco High Income is currently generating about 0.15 per unit of volatility. If you would invest  728.00  in Invesco High Income on September 3, 2024 and sell it today you would earn a total of  26.00  from holding Invesco High Income or generate 3.57% return on investment over 90 days.

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

RiverNorth Flexible Municipalo  vs.  Invesco High Income

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.

Invesco High Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Invesco High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RiverNorth Flexible and Invesco High

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

The idea behind RiverNorth Flexible Municipalome and Invesco High Income 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.