Correlation Between ACNB and Franklin Financial
Can any of the company-specific risk be diversified away by investing in both ACNB and Franklin Financial 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 ACNB and Franklin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACNB Corporation and Franklin Financial Services, you can compare the effects of market volatilities on ACNB and Franklin Financial 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 ACNB with a short position of Franklin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACNB and Franklin Financial.
Diversification Opportunities for ACNB and Franklin Financial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ACNB and Franklin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ACNB Corp. and Franklin Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Financial and ACNB 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 ACNB Corporation are associated (or correlated) with Franklin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Financial has no effect on the direction of ACNB i.e., ACNB and Franklin Financial go up and down completely randomly.
Pair Corralation between ACNB and Franklin Financial
Given the investment horizon of 90 days ACNB Corporation is expected to generate 1.92 times more return on investment than Franklin Financial. However, ACNB is 1.92 times more volatile than Franklin Financial Services. It trades about 0.12 of its potential returns per unit of risk. Franklin Financial Services is currently generating about 0.14 per unit of risk. If you would invest 3,159 in ACNB Corporation on August 24, 2024 and sell it today you would earn a total of 1,603 from holding ACNB Corporation or generate 50.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACNB Corp. vs. Franklin Financial Services
Performance |
| Timeline |
| ACNB |
| Franklin Financial |
ACNB and Franklin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACNB and Franklin Financial
The main advantage of trading using opposite ACNB and Franklin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACNB position performs unexpectedly, Franklin Financial 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 Financial will offset losses from the drop in Franklin Financial's long position.The idea behind ACNB Corporation and Franklin Financial Services 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 Financial vs. Magyar Bancorp | Franklin Financial vs. Affinity Bancshares | Franklin Financial vs. Home Federal Bancorp | Franklin Financial vs. Sound Financial Bancorp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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