Correlation Between RiverNorth Managed and Leverage Shares

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

By analyzing existing cross correlation between RiverNorth Managed Duration and Leverage Shares 2X, you can compare the effects of market volatilities on RiverNorth Managed and Leverage Shares 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 Managed with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorth Managed and Leverage Shares.

Diversification Opportunities for RiverNorth Managed and Leverage Shares

0.05

Correlation Coefficient

RiverNorth Managed  Leverage Shares

Significant diversification

The 3 months correlation between RiverNorth and Leverage is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Managed Duration and Leverage Shares 2X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 2X and RiverNorth Managed 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 Managed Duration are associated (or correlated) with Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 2X has no effect on the direction of RiverNorth Managed i.e., RiverNorth Managed and Leverage Shares go up and down completely randomly.

Pair Corralation between RiverNorth Managed and Leverage Shares

Considering the 90-day investment horizon RiverNorth Managed Duration is expected to generate 0.14 times more return on investment than Leverage Shares. However, RiverNorth Managed Duration is 7.16 times less risky than Leverage Shares. It trades about 0.06 of its potential returns per unit of risk. Leverage Shares 2X is currently generating about 0.0 per unit of risk. If you would invest  1,357  in RiverNorth Managed Duration on May 6, 2025 and sell it today you would earn a total of  28.00  from holding RiverNorth Managed Duration or generate 2.06% return on investment over 90 days.

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

RiverNorth Managed Duration  vs.  Leverage Shares 2X

RiverNorth Managed

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Managed Duration are ranked lower than 4 (%) 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 recent stock price disarray, may contribute to short-term losses for the investors.

Leverage Shares 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leverage Shares 2X has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Leverage Shares is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RiverNorth Managed and Leverage Shares

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

The idea behind RiverNorth Managed Duration and Leverage Shares 2X 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 Global Correlations module to find global opportunities by holding instruments from different markets.