Correlation Between Rivernorth Opportunistic and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Rivernorth Opportunistic and Franklin Liberty 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 Opportunistic and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivernorth Opportunistic Municipalome and Franklin Liberty High, you can compare the effects of market volatilities on Rivernorth Opportunistic and Franklin Liberty 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 Opportunistic with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivernorth Opportunistic and Franklin Liberty.
Diversification Opportunities for Rivernorth Opportunistic and Franklin Liberty
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rivernorth and Franklin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Rivernorth Opportunistic Munic and Franklin Liberty High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty High and Rivernorth Opportunistic 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 Opportunistic Municipalome are associated (or correlated) with Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty High has no effect on the direction of Rivernorth Opportunistic i.e., Rivernorth Opportunistic and Franklin Liberty go up and down completely randomly.
Pair Corralation between Rivernorth Opportunistic and Franklin Liberty
Considering the 90-day investment horizon Rivernorth Opportunistic is expected to generate 5.9 times less return on investment than Franklin Liberty. In addition to that, Rivernorth Opportunistic is 2.22 times more volatile than Franklin Liberty High. It trades about 0.02 of its total potential returns per unit of risk. Franklin Liberty High is currently generating about 0.21 per unit of volatility. If you would invest 2,388 in Franklin Liberty High on December 5, 2024 and sell it today you would earn a total of 21.00 from holding Franklin Liberty High or generate 0.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Rivernorth Opportunistic Munic vs. Franklin Liberty High
Performance |
Timeline |
Rivernorth Opportunistic |
Franklin Liberty High |
Rivernorth Opportunistic and Franklin Liberty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rivernorth Opportunistic and Franklin Liberty
The main advantage of trading using opposite Rivernorth Opportunistic and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivernorth Opportunistic position performs unexpectedly, Franklin Liberty 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 Liberty will offset losses from the drop in Franklin Liberty's long position.The idea behind Rivernorth Opportunistic Municipalome and Franklin Liberty High 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.
Franklin Liberty vs. iShares Edge High | Franklin Liberty vs. Franklin Liberty Senior | Franklin Liberty vs. Franklin Liberty International | Franklin Liberty vs. PGIM Active High |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
CEOs Directory Screen CEOs from public companies around the world | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |