Correlation Between Franklin Resources and BurTech Acquisition

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Can any of the company-specific risk be diversified away by investing in both Franklin Resources and BurTech Acquisition 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 Franklin Resources and BurTech Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Resources and BurTech Acquisition Corp, you can compare the effects of market volatilities on Franklin Resources and BurTech Acquisition 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 Franklin Resources with a short position of BurTech Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Resources and BurTech Acquisition.

Diversification Opportunities for Franklin Resources and BurTech Acquisition

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Franklin and BurTech is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and BurTech Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BurTech Acquisition Corp and Franklin Resources 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 Franklin Resources are associated (or correlated) with BurTech Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BurTech Acquisition Corp has no effect on the direction of Franklin Resources i.e., Franklin Resources and BurTech Acquisition go up and down completely randomly.

Pair Corralation between Franklin Resources and BurTech Acquisition

Considering the 90-day investment horizon Franklin Resources is expected to generate 9.12 times more return on investment than BurTech Acquisition. However, Franklin Resources is 9.12 times more volatile than BurTech Acquisition Corp. It trades about 0.25 of its potential returns per unit of risk. BurTech Acquisition Corp is currently generating about 0.19 per unit of risk. If you would invest  2,077  in Franklin Resources on September 1, 2024 and sell it today you would earn a total of  199.00  from holding Franklin Resources or generate 9.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Franklin Resources  vs.  BurTech Acquisition Corp

 Performance 
       Timeline  
Franklin Resources 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Franklin Resources displayed solid returns over the last few months and may actually be approaching a breakup point.
BurTech Acquisition Corp 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in BurTech Acquisition Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, BurTech Acquisition is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Franklin Resources and BurTech Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Resources and BurTech Acquisition

The main advantage of trading using opposite Franklin Resources and BurTech Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Resources position performs unexpectedly, BurTech Acquisition 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 BurTech Acquisition will offset losses from the drop in BurTech Acquisition's long position.
The idea behind Franklin Resources and BurTech Acquisition Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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