Correlation Between Applied Finance and Franklin New
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Franklin New 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 Applied Finance and Franklin New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Franklin New York, you can compare the effects of market volatilities on Applied Finance and Franklin New 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 Applied Finance with a short position of Franklin New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Franklin New.
Diversification Opportunities for Applied Finance and Franklin New
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Applied and Franklin is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of Applied Finance i.e., Applied Finance and Franklin New go up and down completely randomly.
Pair Corralation between Applied Finance and Franklin New
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 5.76 times more return on investment than Franklin New. However, Applied Finance is 5.76 times more volatile than Franklin New York. It trades about 0.05 of its potential returns per unit of risk. Franklin New York is currently generating about 0.06 per unit of risk. If you would invest 1,865 in Applied Finance Explorer on September 12, 2024 and sell it today you would earn a total of 491.00 from holding Applied Finance Explorer or generate 26.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Franklin New York
Performance |
| Timeline |
| Applied Finance Explorer |
| Franklin New York |
Applied Finance and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Franklin New
The main advantage of trading using opposite Applied Finance and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Franklin New vs. Vanguard Small Cap Value | Franklin New vs. Palm Valley Capital | Franklin New vs. Omni Small Cap Value | Franklin New vs. Applied Finance Explorer |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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