Correlation Between Flaherty Crumrine and RiverNorth Flexible

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

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

Diversification Opportunities for Flaherty Crumrine and RiverNorth Flexible

0.85

Correlation Coefficient

Flaherty Crumrine  RiverNorth Flexible

Very poor diversification

The 3 months correlation between Flaherty and RiverNorth is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Preferred and RiverNorth Flexible Municipalo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Flexible and Flaherty Crumrine 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 Flaherty Crumrine Preferred 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 Flaherty Crumrine i.e., Flaherty Crumrine and RiverNorth Flexible go up and down completely randomly.

Pair Corralation between Flaherty Crumrine and RiverNorth Flexible

Considering the 90-day investment horizon Flaherty Crumrine is expected to generate 1.28 times less return on investment than RiverNorth Flexible. In addition to that, Flaherty Crumrine is 1.56 times more volatile than RiverNorth Flexible Municipalome. It trades about 0.14 of its total potential returns per unit of risk. RiverNorth Flexible Municipalome is currently generating about 0.28 per unit of volatility. If you would invest  1,587  in RiverNorth Flexible Municipalome on July 6, 2024 and sell it today you would earn a total of  43.00  from holding RiverNorth Flexible Municipalome or generate 2.71% return on investment over 90 days.

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

Flaherty Crumrine Preferred  vs.  RiverNorth Flexible Municipalo

Flaherty Crumrine

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty Crumrine Preferred are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Flaherty Crumrine may actually be approaching a critical reversion point that can send shares even higher in November 2024.

RiverNorth Flexible

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Flexible Municipalome are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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 Flaherty Crumrine and RiverNorth Flexible

The main advantage of trading using opposite Flaherty Crumrine and RiverNorth Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flaherty Crumrine 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 Flaherty Crumrine Preferred 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..