Correlation Between Franklin Adjustable and Riversource Series

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

By analyzing existing cross correlation between Franklin Adjustable Government and Riversource Series Trust, you can compare the effects of market volatilities on Franklin Adjustable and Riversource Series 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 Adjustable with a short position of Riversource Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Riversource Series.

Diversification Opportunities for Franklin Adjustable and Riversource Series

-0.09

Correlation Coefficient

Franklin Adjustable  Riversource Series

Good diversification

The 3 months correlation between Franklin and Riversource is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Riversource Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riversource Series Trust and Franklin Adjustable 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 Adjustable Government are associated (or correlated) with Riversource Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riversource Series Trust has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Riversource Series go up and down completely randomly.

Pair Corralation between Franklin Adjustable and Riversource Series

Assuming the 90 days horizon Franklin Adjustable Government is not expected to generate positive returns. However, Franklin Adjustable Government is 26.61 times less risky than Riversource Series. It waists most of its returns potential to compensate for thr risk taken. Riversource Series is generating about -0.12 per unit of risk. If you would invest  753.00  in Franklin Adjustable Government on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Franklin Adjustable Government or generate 0.0% return on investment over 90 days.

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

Franklin Adjustable Government  vs.  Riversource Series Trust

Franklin Adjustable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Adjustable Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Franklin Adjustable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Riversource Series Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riversource Series Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Franklin Adjustable and Riversource Series

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

The idea behind Franklin Adjustable Government and Riversource Series Trust 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.