Correlation Between Franklin Resources and Rivernorth Opportunities
Can any of the company-specific risk be diversified away by investing in both Franklin Resources and Rivernorth Opportunities 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 Franklin Resources and Rivernorth Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Resources and Rivernorth Opportunities, you can compare the effects of market volatilities on Franklin Resources and Rivernorth Opportunities 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 Franklin Resources with a short position of Rivernorth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Resources and Rivernorth Opportunities.
Diversification Opportunities for Franklin Resources and Rivernorth Opportunities
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Rivernorth is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and Rivernorth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivernorth Opportunities and Franklin Resources 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 Franklin Resources are associated (or correlated) with Rivernorth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivernorth Opportunities has no effect on the direction of Franklin Resources i.e., Franklin Resources and Rivernorth Opportunities go up and down completely randomly.
Pair Corralation between Franklin Resources and Rivernorth Opportunities
Considering the 90-day investment horizon Franklin Resources is expected to generate 5.59 times less return on investment than Rivernorth Opportunities. In addition to that, Franklin Resources is 2.08 times more volatile than Rivernorth Opportunities. It trades about 0.01 of its total potential returns per unit of risk. Rivernorth Opportunities is currently generating about 0.07 per unit of volatility. If you would invest 966.00 in Rivernorth Opportunities on September 6, 2024 and sell it today you would earn a total of 298.00 from holding Rivernorth Opportunities or generate 30.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Resources vs. Rivernorth Opportunities
Performance |
Timeline |
Franklin Resources |
Rivernorth Opportunities |
Franklin Resources and Rivernorth Opportunities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Resources and Rivernorth Opportunities
The main advantage of trading using opposite Franklin Resources and Rivernorth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Resources position performs unexpectedly, Rivernorth Opportunities 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 Opportunities will offset losses from the drop in Rivernorth Opportunities' long position.Franklin Resources vs. BlackRock | Franklin Resources vs. Main Street Capital | Franklin Resources vs. Blackstone Group | Franklin Resources vs. Ares Capital |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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