Correlation Between RiverFront Dynamic and SPDR Portfolio

Can any of the company-specific risk be diversified away by investing in both RiverFront Dynamic and SPDR Portfolio 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 RiverFront Dynamic and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RiverFront Dynamic Core and SPDR Portfolio SP, you can compare the effects of market volatilities on RiverFront Dynamic and SPDR Portfolio 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 RiverFront Dynamic with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverFront Dynamic and SPDR Portfolio.

Diversification Opportunities for RiverFront Dynamic and SPDR Portfolio

-0.16

Correlation Coefficient

RiverFront Dynamic  SPDR Portfolio

Good diversification

The 3 months correlation between RiverFront and SPDR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding RiverFront Dynamic Core and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP and RiverFront Dynamic 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 RiverFront Dynamic Core are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of RiverFront Dynamic i.e., RiverFront Dynamic and SPDR Portfolio go up and down completely randomly.

Pair Corralation between RiverFront Dynamic and SPDR Portfolio

Given the investment horizon of 90 days RiverFront Dynamic Core is expected to generate 0.12 times more return on investment than SPDR Portfolio. However, RiverFront Dynamic Core is 8.14 times less risky than SPDR Portfolio. It trades about 0.18 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about -0.08 per unit of risk. If you would invest  2,173  in RiverFront Dynamic Core on March 18, 2024 and sell it today you would earn a total of  46.00  from holding RiverFront Dynamic Core or generate 2.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

RiverFront Dynamic Core  vs.  SPDR Portfolio SP

RiverFront Dynamic Core

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RiverFront Dynamic Core are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, RiverFront Dynamic is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

SPDR Portfolio SP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Portfolio SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with RiverFront Dynamic and SPDR Portfolio

The main advantage of trading using opposite RiverFront Dynamic and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverFront Dynamic position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio's long position.

The idea behind RiverFront Dynamic Core and SPDR Portfolio SP 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.