Correlation Between Federated Premier and RiverNorth Managed
Can any of the company-specific risk be diversified away by investing in both Federated Premier 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 Federated Premier and RiverNorth Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Premier Municipal and RiverNorth Managed Duration, you can compare the effects of market volatilities on Federated Premier 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 Federated Premier with a short position of RiverNorth Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and RiverNorth Managed.
Diversification Opportunities for Federated Premier and RiverNorth Managed
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and RiverNorth is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and RiverNorth Managed Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Managed and Federated Premier 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 Federated Premier Municipal 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 Federated Premier i.e., Federated Premier and RiverNorth Managed go up and down completely randomly.
Pair Corralation between Federated Premier and RiverNorth Managed
Considering the 90-day investment horizon Federated Premier Municipal is expected to under-perform the RiverNorth Managed. In addition to that, Federated Premier is 1.26 times more volatile than RiverNorth Managed Duration. It trades about -0.06 of its total potential returns per unit of risk. RiverNorth Managed Duration is currently generating about -0.08 per unit of volatility. If you would invest 1,576 in RiverNorth Managed Duration on August 29, 2024 and sell it today you would lose (16.00) from holding RiverNorth Managed Duration or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. RiverNorth Managed Duration
Performance |
| Timeline |
| Federated Premier |
| RiverNorth Managed |
Federated Premier and RiverNorth Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and RiverNorth Managed
The main advantage of trading using opposite Federated Premier and RiverNorth Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier 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.| Federated Premier vs. DTF Tax Free | Federated Premier vs. MFS High Yield | Federated Premier vs. MFS High Income | Federated Premier vs. John Hancock Income |
Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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