Correlation Between RiverNorth Specialty and Pioneer Municipal
Can any of the company-specific risk be diversified away by investing in both RiverNorth Specialty and Pioneer Municipal 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 Specialty and Pioneer Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RiverNorth Specialty Finance and Pioneer Municipal High, you can compare the effects of market volatilities on RiverNorth Specialty and Pioneer Municipal 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 Specialty with a short position of Pioneer Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorth Specialty and Pioneer Municipal.
Diversification Opportunities for RiverNorth Specialty and Pioneer Municipal
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RiverNorth and Pioneer is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Specialty Finance and Pioneer Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Municipal High and RiverNorth Specialty 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 Specialty Finance are associated (or correlated) with Pioneer Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Municipal High has no effect on the direction of RiverNorth Specialty i.e., RiverNorth Specialty and Pioneer Municipal go up and down completely randomly.
Pair Corralation between RiverNorth Specialty and Pioneer Municipal
Considering the 90-day investment horizon RiverNorth Specialty Finance is expected to generate 0.55 times more return on investment than Pioneer Municipal. However, RiverNorth Specialty Finance is 1.82 times less risky than Pioneer Municipal. It trades about 0.06 of its potential returns per unit of risk. Pioneer Municipal High is currently generating about 0.02 per unit of risk. If you would invest 1,319 in RiverNorth Specialty Finance on October 21, 2024 and sell it today you would earn a total of 192.00 from holding RiverNorth Specialty Finance or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RiverNorth Specialty Finance vs. Pioneer Municipal High
Performance |
| Timeline |
| RiverNorth Specialty |
| Pioneer Municipal High |
RiverNorth Specialty and Pioneer Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RiverNorth Specialty and Pioneer Municipal
The main advantage of trading using opposite RiverNorth Specialty and Pioneer Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverNorth Specialty position performs unexpectedly, Pioneer Municipal 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 Pioneer Municipal will offset losses from the drop in Pioneer Municipal's long position.The idea behind RiverNorth Specialty Finance and Pioneer Municipal High 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.
| Pioneer Municipal vs. New America High | Pioneer Municipal vs. DWS Municipal Income | Pioneer Municipal vs. RiverNorth Specialty Finance | Pioneer Municipal vs. Putnam Managed Municipal |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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