Correlation Between American Century and Franklin Real
Can any of the company-specific risk be diversified away by investing in both American Century and Franklin Real 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 American Century and Franklin Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Global and Franklin Real Estate, you can compare the effects of market volatilities on American Century and Franklin Real 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 American Century with a short position of Franklin Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Franklin Real.
Diversification Opportunities for American Century and Franklin Real
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Century Global and Franklin Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Real Estate and American Century 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 American Century Global are associated (or correlated) with Franklin Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Real Estate has no effect on the direction of American Century i.e., American Century and Franklin Real go up and down completely randomly.
Pair Corralation between American Century and Franklin Real
Assuming the 90 days horizon American Century Global is expected to generate 0.9 times more return on investment than Franklin Real. However, American Century Global is 1.11 times less risky than Franklin Real. It trades about 0.08 of its potential returns per unit of risk. Franklin Real Estate is currently generating about 0.06 per unit of risk. If you would invest 1,411 in American Century Global on August 29, 2024 and sell it today you would earn a total of 21.00 from holding American Century Global or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Global vs. Franklin Real Estate
Performance |
| Timeline |
| American Century Global |
| Franklin Real Estate |
American Century and Franklin Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Franklin Real
The main advantage of trading using opposite American Century and Franklin Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Franklin Real 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 Real will offset losses from the drop in Franklin Real's long position.| American Century vs. HUMANA INC | American Century vs. Aquagold International | American Century vs. Barloworld Ltd ADR | American Century vs. Morningstar Unconstrained Allocation |
| Franklin Real vs. Franklin Natural Resources | Franklin Real vs. HUMANA INC | Franklin Real vs. Aquagold International | Franklin Real vs. Barloworld Ltd ADR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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