Correlation Between Absolute Convertible and Franklin International
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Franklin International 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 Absolute Convertible and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Franklin International Small, you can compare the effects of market volatilities on Absolute Convertible and Franklin International 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 Absolute Convertible with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Franklin International.
Diversification Opportunities for Absolute Convertible and Franklin International
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Absolute and Franklin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Franklin International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Franklin International go up and down completely randomly.
Pair Corralation between Absolute Convertible and Franklin International
Assuming the 90 days horizon Absolute Convertible is expected to generate 7.23 times less return on investment than Franklin International. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 16.55 times less risky than Franklin International. It trades about 0.37 of its potential returns per unit of risk. Franklin International Small is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,232 in Franklin International Small on September 3, 2024 and sell it today you would earn a total of 123.00 from holding Franklin International Small or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 11.31% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Franklin International Small
Performance |
| Timeline |
| Absolute Convertible |
| Franklin International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Absolute Convertible and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Franklin International
The main advantage of trading using opposite Absolute Convertible and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Franklin International 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 International will offset losses from the drop in Franklin International's long position.| Absolute Convertible vs. Dunham Porategovernment Bond | Absolute Convertible vs. John Hancock Government | Absolute Convertible vs. Government Securities Fund | Absolute Convertible vs. Ab Government Exchange |
| Franklin International vs. Cutler Equity | Franklin International vs. Rbc Global Equity | Franklin International vs. Sarofim Equity | Franklin International vs. Scharf Fund Retail |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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