Correlation Between RiverNorth Managed and Franklin Templeton

Can any of the company-specific risk be diversified away by investing in both RiverNorth Managed and Franklin Templeton 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 Managed and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RiverNorth Managed Duration and Franklin Templeton Limited, you can compare the effects of market volatilities on RiverNorth Managed and Franklin Templeton 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 Managed with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorth Managed and Franklin Templeton.

Diversification Opportunities for RiverNorth Managed and Franklin Templeton

0.62

Correlation Coefficient

RiverNorth Managed  Franklin Templeton

Poor diversification

The 3 months correlation between RiverNorth and Franklin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Managed Duration and Franklin Templeton Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and RiverNorth Managed 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 Managed Duration are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton has no effect on the direction of RiverNorth Managed i.e., RiverNorth Managed and Franklin Templeton go up and down completely randomly.

Pair Corralation between RiverNorth Managed and Franklin Templeton

Considering the 90-day investment horizon RiverNorth Managed Duration is expected to under-perform the Franklin Templeton. In addition to that, RiverNorth Managed is 1.47 times more volatile than Franklin Templeton Limited. It trades about -0.01 of its total potential returns per unit of risk. Franklin Templeton Limited is currently generating about 0.07 per unit of volatility. If you would invest  656.00  in Franklin Templeton Limited on September 15, 2024 and sell it today you would earn a total of  13.00  from holding Franklin Templeton Limited or generate 1.98% return on investment over 90 days.

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

RiverNorth Managed Duration  vs.  Franklin Templeton Limited

RiverNorth Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RiverNorth Managed Duration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, RiverNorth Managed is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Franklin Templeton

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Franklin Templeton is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RiverNorth Managed and Franklin Templeton

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

The idea behind RiverNorth Managed Duration and Franklin Templeton Limited 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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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.