Correlation Between Associated Capital and RiverNorth Managed

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

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

Diversification Opportunities for Associated Capital and RiverNorth Managed

0.05

Correlation Coefficient

Associated Capital  RiverNorth Managed

Significant diversification

The 3 months correlation between Associated and RiverNorth is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and RiverNorth Managed Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Managed and Associated Capital 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 Associated Capital Group are associated (or correlated) with RiverNorth Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverNorth Managed has no effect on the direction of Associated Capital i.e., Associated Capital and RiverNorth Managed go up and down completely randomly.

Pair Corralation between Associated Capital and RiverNorth Managed

Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 1.25 times more return on investment than RiverNorth Managed. However, Associated Capital is 1.25 times more volatile than RiverNorth Managed Duration. It trades about -0.02 of its potential returns per unit of risk. RiverNorth Managed Duration is currently generating about -0.08 per unit of risk. If you would invest  3,243  in Associated Capital Group on January 29, 2024 and sell it today you would lose (10.00) from holding Associated Capital Group or give up 0.31% of portfolio value over 90 days.

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

Associated Capital Group  vs.  RiverNorth Managed Duration

Associated Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

RiverNorth Managed

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Managed Duration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, RiverNorth Managed is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Associated Capital and RiverNorth Managed

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

The idea behind Associated Capital Group and RiverNorth Managed Duration 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.