Correlation Between DWS Municipal and RiverNorth Managed
Can any of the company-specific risk be diversified away by investing in both DWS Municipal 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 DWS Municipal and RiverNorth Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DWS Municipal Income and RiverNorth Managed Duration, you can compare the effects of market volatilities on DWS Municipal 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 DWS Municipal with a short position of RiverNorth Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and RiverNorth Managed.
Diversification Opportunities for DWS Municipal and RiverNorth Managed
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DWS and RiverNorth is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and RiverNorth Managed Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Managed and DWS Municipal 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 DWS Municipal Income 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 DWS Municipal i.e., DWS Municipal and RiverNorth Managed go up and down completely randomly.
Pair Corralation between DWS Municipal and RiverNorth Managed
Considering the 90-day investment horizon DWS Municipal Income is expected to generate 0.85 times more return on investment than RiverNorth Managed. However, DWS Municipal Income is 1.18 times less risky than RiverNorth Managed. It trades about 0.29 of its potential returns per unit of risk. RiverNorth Managed Duration is currently generating about 0.23 per unit of risk. If you would invest 970.00 in DWS Municipal Income on September 1, 2024 and sell it today you would earn a total of 36.00 from holding DWS Municipal Income or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DWS Municipal Income vs. RiverNorth Managed Duration
Performance |
| Timeline |
| DWS Municipal Income |
| RiverNorth Managed |
DWS Municipal and RiverNorth Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DWS Municipal and RiverNorth Managed
The main advantage of trading using opposite DWS Municipal and RiverNorth Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal 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.| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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