Correlation Between Apple and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Apple and Franklin Growth 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 Apple and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Franklin Growth Opportunities, you can compare the effects of market volatilities on Apple and Franklin Growth 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 Apple with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Franklin Growth.
Diversification Opportunities for Apple and Franklin Growth
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and Franklin is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo and Apple 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 Apple Inc are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Oppo has no effect on the direction of Apple i.e., Apple and Franklin Growth go up and down completely randomly.
Pair Corralation between Apple and Franklin Growth
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Franklin Growth. In addition to that, Apple is 1.31 times more volatile than Franklin Growth Opportunities. It trades about -0.39 of its total potential returns per unit of risk. Franklin Growth Opportunities is currently generating about -0.01 per unit of volatility. If you would invest 4,969 in Franklin Growth Opportunities on October 23, 2024 and sell it today you would lose (17.00) from holding Franklin Growth Opportunities or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Franklin Growth Opportunities
Performance |
| Timeline |
| Apple Inc |
| Franklin Growth Oppo |
Apple and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Franklin Growth
The main advantage of trading using opposite Apple and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.The idea behind Apple Inc and Franklin Growth Opportunities 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 Growth vs. Kinetics Global Fund | Franklin Growth vs. Gmo Global Equity | Franklin Growth vs. Rbc Global Equity | Franklin Growth vs. Rbc Bluebay Global |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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