Correlation Between Alpine Ultra and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Alpine Ultra and Franklin Federal 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 Alpine Ultra and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpine Ultra Short and Franklin Federal Limited Term, you can compare the effects of market volatilities on Alpine Ultra and Franklin Federal 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 Alpine Ultra with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpine Ultra and Franklin Federal.
Diversification Opportunities for Alpine Ultra and Franklin Federal
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alpine and Franklin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Ultra Short and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Alpine Ultra 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 Alpine Ultra Short are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Alpine Ultra i.e., Alpine Ultra and Franklin Federal go up and down completely randomly.
Pair Corralation between Alpine Ultra and Franklin Federal
Assuming the 90 days horizon Alpine Ultra is expected to generate 1.31 times less return on investment than Franklin Federal. But when comparing it to its historical volatility, Alpine Ultra Short is 1.75 times less risky than Franklin Federal. It trades about 0.24 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,023 in Franklin Federal Limited Term on October 22, 2024 and sell it today you would earn a total of 4.00 from holding Franklin Federal Limited Term or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alpine Ultra Short vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Alpine Ultra Short |
| Franklin Federal Lim |
Alpine Ultra and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpine Ultra and Franklin Federal
The main advantage of trading using opposite Alpine Ultra and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpine Ultra position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Alpine Ultra vs. Alpine Ultra Short | Alpine Ultra vs. Alpine Dynamic Dividend | Alpine Ultra vs. Alpine Realty Income | Alpine Ultra vs. Alpine Global Infrastructure |
| Franklin Federal vs. Blackstone Secured Lending | Franklin Federal vs. Fidelity Advisor Financial | Franklin Federal vs. Icon Financial Fund | Franklin Federal vs. Mesirow Financial Small |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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