Correlation Between Spring Valley and Franklin Templeton

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Can any of the company-specific risk be diversified away by investing in both Spring Valley 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 Spring Valley and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spring Valley Acquisition and Franklin Templeton ETF, you can compare the effects of market volatilities on Spring Valley 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 Spring Valley with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Valley and Franklin Templeton.

Diversification Opportunities for Spring Valley and Franklin Templeton

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Spring and Franklin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF and Spring Valley 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 Spring Valley Acquisition 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 ETF has no effect on the direction of Spring Valley i.e., Spring Valley and Franklin Templeton go up and down completely randomly.

Pair Corralation between Spring Valley and Franklin Templeton

Given the investment horizon of 90 days Spring Valley Acquisition is expected to generate 0.1 times more return on investment than Franklin Templeton. However, Spring Valley Acquisition is 9.94 times less risky than Franklin Templeton. It trades about 0.34 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about -0.1 per unit of risk. If you would invest  1,097  in Spring Valley Acquisition on January 19, 2024 and sell it today you would earn a total of  6.00  from holding Spring Valley Acquisition or generate 0.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Spring Valley Acquisition  vs.  Franklin Templeton ETF

 Performance 
       Timeline  
Spring Valley Acquisition 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Spring Valley Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Franklin Templeton ETF 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Spring Valley and Franklin Templeton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spring Valley and Franklin Templeton

The main advantage of trading using opposite Spring Valley and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley 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 Spring Valley Acquisition and Franklin Templeton ETF 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.

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