Correlation Between Sterling Capital and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Franklin Natural 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 Sterling Capital and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital South and Franklin Natural Resources, you can compare the effects of market volatilities on Sterling Capital and Franklin Natural 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 Sterling Capital with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Franklin Natural.
Diversification Opportunities for Sterling Capital and Franklin Natural
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sterling and Franklin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital South and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Sterling Capital 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 Sterling Capital South are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Sterling Capital i.e., Sterling Capital and Franklin Natural go up and down completely randomly.
Pair Corralation between Sterling Capital and Franklin Natural
Assuming the 90 days horizon Sterling Capital is expected to generate 2.25 times less return on investment than Franklin Natural. But when comparing it to its historical volatility, Sterling Capital South is 6.3 times less risky than Franklin Natural. It trades about 0.07 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,882 in Franklin Natural Resources on September 12, 2024 and sell it today you would earn a total of 198.00 from holding Franklin Natural Resources or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital South vs. Franklin Natural Resources
Performance |
| Timeline |
| Sterling Capital South |
| Franklin Natural Res |
Sterling Capital and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Franklin Natural
The main advantage of trading using opposite Sterling Capital and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Franklin Natural 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 Natural will offset losses from the drop in Franklin Natural's long position.| Sterling Capital vs. Franklin Natural Resources | Sterling Capital vs. Tortoise Energy Independence | Sterling Capital vs. Hennessy Bp Energy | Sterling Capital vs. Alpsalerian Energy Infrastructure |
| Franklin Natural vs. Victory Rs Partners | Franklin Natural vs. Queens Road Small | Franklin Natural vs. Royce Opportunity Fund | Franklin Natural vs. Pace Smallmedium Value |
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.
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