Correlation Between RiverNorth Flexible and Templeton Emerging

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

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

Diversification Opportunities for RiverNorth Flexible and Templeton Emerging

0.52

Correlation Coefficient

RiverNorth Flexible  Templeton Emerging

Very weak diversification

The 3 months correlation between RiverNorth and Templeton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Flexible Municipalo and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging and RiverNorth Flexible 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 Flexible Municipalome are associated (or correlated) with Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of RiverNorth Flexible i.e., RiverNorth Flexible and Templeton Emerging go up and down completely randomly.

Pair Corralation between RiverNorth Flexible and Templeton Emerging

Considering the 90-day investment horizon RiverNorth Flexible is expected to generate 1.13 times less return on investment than Templeton Emerging. But when comparing it to its historical volatility, RiverNorth Flexible Municipalome is 1.43 times less risky than Templeton Emerging. It trades about 0.04 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,030  in Templeton Emerging Markets on September 20, 2024 and sell it today you would earn a total of  174.00  from holding Templeton Emerging Markets or generate 16.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

RiverNorth Flexible Municipalo  vs.  Templeton Emerging Markets

RiverNorth Flexible

Risk-Adjusted Performance

0 of 100

Very Weak

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

Templeton Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable primary indicators, Templeton Emerging is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RiverNorth Flexible and Templeton Emerging

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

The idea behind RiverNorth Flexible Municipalome and Templeton Emerging Markets 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.