Correlation Between Absolute Convertible and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Franklin Convertible 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 Convertible 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 Vertible Securities, you can compare the effects of market volatilities on Absolute Convertible and Franklin Convertible 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 Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Franklin Convertible.
Diversification Opportunities for Absolute Convertible and Franklin Convertible
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Absolute and Franklin is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible 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 Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Franklin Convertible go up and down completely randomly.
Pair Corralation between Absolute Convertible and Franklin Convertible
Assuming the 90 days horizon Absolute Convertible is expected to generate 13.72 times less return on investment than Franklin Convertible. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 12.58 times less risky than Franklin Convertible. It trades about 0.44 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 2,300 in Franklin Vertible Securities on August 28, 2024 and sell it today you would earn a total of 141.00 from holding Franklin Vertible Securities or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Franklin Vertible Securities
Performance |
| Timeline |
| Absolute Convertible |
| Franklin Convertible |
Absolute Convertible and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Franklin Convertible
The main advantage of trading using opposite Absolute Convertible and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.| Absolute Convertible vs. Absolute Capital Opportunities | Absolute Convertible vs. Invesco Small Cap | Absolute Convertible vs. Vanguard 500 Index | Absolute Convertible vs. Rivernorth Opportunities |
| Franklin Convertible vs. Franklin Strategic Income | Franklin Convertible vs. Franklin Rising Dividends | Franklin Convertible vs. Franklin Natural Resources | Franklin Convertible vs. Aquagold International |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |