Correlation Between Amazon and Franklin Corefolio
Can any of the company-specific risk be diversified away by investing in both Amazon and Franklin Corefolio 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 Amazon and Franklin Corefolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Franklin Efolio Allocation, you can compare the effects of market volatilities on Amazon and Franklin Corefolio 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 Amazon with a short position of Franklin Corefolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Franklin Corefolio.
Diversification Opportunities for Amazon and Franklin Corefolio
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and Franklin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Franklin Efolio Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Efolio Allo and Amazon 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 Amazon Inc are associated (or correlated) with Franklin Corefolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Efolio Allo has no effect on the direction of Amazon i.e., Amazon and Franklin Corefolio go up and down completely randomly.
Pair Corralation between Amazon and Franklin Corefolio
Given the investment horizon of 90 days Amazon Inc is expected to generate 2.61 times more return on investment than Franklin Corefolio. However, Amazon is 2.61 times more volatile than Franklin Efolio Allocation. It trades about 0.19 of its potential returns per unit of risk. Franklin Efolio Allocation is currently generating about 0.29 per unit of risk. If you would invest 19,578 in Amazon Inc on September 4, 2024 and sell it today you would earn a total of 1,493 from holding Amazon Inc or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Franklin Efolio Allocation
Performance |
| Timeline |
| Amazon Inc |
| Franklin Efolio Allo |
Amazon and Franklin Corefolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Franklin Corefolio
The main advantage of trading using opposite Amazon and Franklin Corefolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Franklin Corefolio 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 Corefolio will offset losses from the drop in Franklin Corefolio's long position.The idea behind Amazon Inc and Franklin Efolio Allocation 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 Corefolio vs. Franklin Founding Funds | Franklin Corefolio vs. Franklin Growth Allocation | Franklin Corefolio vs. Franklin Growth Fund | Franklin Corefolio vs. Franklin Growth Opportunities |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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