Correlation Between RiverNorth Specialty and Virtus Global
Can any of the company-specific risk be diversified away by investing in both RiverNorth Specialty and Virtus Global 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 Virtus Global 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 Virtus Global Multi, you can compare the effects of market volatilities on RiverNorth Specialty and Virtus Global 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 Virtus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorth Specialty and Virtus Global.
Diversification Opportunities for RiverNorth Specialty and Virtus Global
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RiverNorth and Virtus is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Specialty Finance and Virtus Global Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Global Multi 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 Virtus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Global Multi has no effect on the direction of RiverNorth Specialty i.e., RiverNorth Specialty and Virtus Global go up and down completely randomly.
Pair Corralation between RiverNorth Specialty and Virtus Global
Considering the 90-day investment horizon RiverNorth Specialty Finance is expected to under-perform the Virtus Global. But the etf apears to be less risky and, when comparing its historical volatility, RiverNorth Specialty Finance is 1.17 times less risky than Virtus Global. The etf trades about -0.11 of its potential returns per unit of risk. The Virtus Global Multi is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 787.00 in Virtus Global Multi on August 27, 2024 and sell it today you would earn a total of 4.00 from holding Virtus Global Multi or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RiverNorth Specialty Finance vs. Virtus Global Multi
Performance |
| Timeline |
| RiverNorth Specialty |
| Virtus Global Multi |
RiverNorth Specialty and Virtus Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RiverNorth Specialty and Virtus Global
The main advantage of trading using opposite RiverNorth Specialty and Virtus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverNorth Specialty position performs unexpectedly, Virtus Global 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 Virtus Global will offset losses from the drop in Virtus Global's long position.The idea behind RiverNorth Specialty Finance and Virtus Global Multi 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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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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