Correlation Between Aquila Three and Franklin High
Can any of the company-specific risk be diversified away by investing in both Aquila Three and Franklin High 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 Aquila Three and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquila Three Peaks and Franklin High Income, you can compare the effects of market volatilities on Aquila Three and Franklin High 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 Aquila Three with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Three and Franklin High.
Diversification Opportunities for Aquila Three and Franklin High
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aquila and Franklin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Three Peaks and Franklin High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Income and Aquila Three 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 Aquila Three Peaks are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Income has no effect on the direction of Aquila Three i.e., Aquila Three and Franklin High go up and down completely randomly.
Pair Corralation between Aquila Three and Franklin High
Assuming the 90 days horizon Aquila Three is expected to generate 1.62 times less return on investment than Franklin High. But when comparing it to its historical volatility, Aquila Three Peaks is 1.84 times less risky than Franklin High. It trades about 0.14 of its potential returns per unit of risk. Franklin High Income is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Franklin High Income on September 1, 2024 and sell it today you would earn a total of 25.00 from holding Franklin High Income or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
Aquila Three Peaks vs. Franklin High Income
Performance |
| Timeline |
| Aquila Three Peaks |
| Franklin High Income |
Aquila Three and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquila Three and Franklin High
The main advantage of trading using opposite Aquila Three and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquila Three position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Aquila Three vs. Aquila Three Peaks | Aquila Three vs. Aquila Three Peaks | Aquila Three vs. Aquila Three Peaks | Aquila Three vs. Aquila Three Peaks |
| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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