Correlation Between Sprott Focus and RiverNorth Flexible
Can any of the company-specific risk be diversified away by investing in both Sprott Focus 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 Sprott Focus and RiverNorth Flexible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Focus Trust and RiverNorth Flexible Municipalome, you can compare the effects of market volatilities on Sprott Focus 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 Sprott Focus with a short position of RiverNorth Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Focus and RiverNorth Flexible.
Diversification Opportunities for Sprott Focus and RiverNorth Flexible
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprott and RiverNorth is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and RiverNorth Flexible Municipalo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Flexible and Sprott Focus 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 Sprott Focus Trust 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 Sprott Focus i.e., Sprott Focus and RiverNorth Flexible go up and down completely randomly.
Pair Corralation between Sprott Focus and RiverNorth Flexible
Given the investment horizon of 90 days Sprott Focus is expected to generate 1.33 times less return on investment than RiverNorth Flexible. In addition to that, Sprott Focus is 1.31 times more volatile than RiverNorth Flexible Municipalome. It trades about 0.24 of its total potential returns per unit of risk. RiverNorth Flexible Municipalome is currently generating about 0.43 per unit of volatility. If you would invest 1,364 in RiverNorth Flexible Municipalome on November 9, 2024 and sell it today you would earn a total of 75.00 from holding RiverNorth Flexible Municipalome or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Focus Trust vs. RiverNorth Flexible Municipalo
Performance |
| Timeline |
| Sprott Focus Trust |
| RiverNorth Flexible |
Sprott Focus and RiverNorth Flexible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Focus and RiverNorth Flexible
The main advantage of trading using opposite Sprott Focus and RiverNorth Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Focus 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.| Sprott Focus vs. MFS Investment Grade | Sprott Focus vs. Eaton Vance National | Sprott Focus vs. Nuveen California Select | Sprott Focus vs. Federated Premier Municipal |
| RiverNorth Flexible vs. RiverNorth Flexible Municipalome | RiverNorth Flexible vs. Blackrock Muniholdings Ny | RiverNorth Flexible vs. MFS Investment Grade | RiverNorth Flexible vs. Munivest Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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