Correlation Between Firsthand Alternative and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Firsthand Alternative and Franklin Natural 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 Firsthand Alternative and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Alternative Energy and Franklin Natural Resources, you can compare the effects of market volatilities on Firsthand Alternative and Franklin Natural 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 Firsthand Alternative with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and Franklin Natural.
Diversification Opportunities for Firsthand Alternative and Franklin Natural
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Firsthand and FRANKLIN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Firsthand Alternative 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 Firsthand Alternative Energy are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Firsthand Alternative i.e., Firsthand Alternative and Franklin Natural go up and down completely randomly.
Pair Corralation between Firsthand Alternative and Franklin Natural
Assuming the 90 days horizon Firsthand Alternative Energy is expected to under-perform the Franklin Natural. In addition to that, Firsthand Alternative is 1.48 times more volatile than Franklin Natural Resources. It trades about -0.02 of its total potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.03 per unit of volatility. If you would invest 2,835 in Franklin Natural Resources on August 27, 2024 and sell it today you would earn a total of 380.00 from holding Franklin Natural Resources or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firsthand Alternative Energy vs. Franklin Natural Resources
Performance |
| Timeline |
| Firsthand Alternative |
| Franklin Natural Res |
Firsthand Alternative and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Alternative and Franklin Natural
The main advantage of trading using opposite Firsthand Alternative and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Alternative position performs unexpectedly, Franklin Natural 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 Natural will offset losses from the drop in Franklin Natural's long position.| Firsthand Alternative vs. Guinness Atkinson Alternative | Firsthand Alternative vs. Calvert Global Energy | Firsthand Alternative vs. New Alternatives Fund | Firsthand Alternative vs. Shelton Green Alpha |
| Franklin Natural vs. Prudential High Yield | Franklin Natural vs. Fidelity Capital Income | Franklin Natural vs. Pioneer High Yield | Franklin Natural vs. Virtus High Yield |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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