Correlation Between Franklin Resources and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both Franklin Resources and Travelers Companies 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 Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Resources and The Travelers Companies, you can compare the effects of market volatilities on Franklin Resources and Travelers Companies 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 Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Resources and Travelers Companies.
Diversification Opportunities for Franklin Resources and Travelers Companies
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Travelers is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies 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 Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of Franklin Resources i.e., Franklin Resources and Travelers Companies go up and down completely randomly.
Pair Corralation between Franklin Resources and Travelers Companies
Considering the 90-day investment horizon Franklin Resources is expected to under-perform the Travelers Companies. In addition to that, Franklin Resources is 1.36 times more volatile than The Travelers Companies. It trades about -0.01 of its total potential returns per unit of risk. The Travelers Companies is currently generating about 0.07 per unit of volatility. If you would invest 17,290 in The Travelers Companies on September 25, 2024 and sell it today you would earn a total of 6,846 from holding The Travelers Companies or generate 39.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.76% |
| Values | Daily Returns |
Franklin Resources vs. The Travelers Companies
Performance |
| Timeline |
| Franklin Resources |
| The Travelers Companies |
Franklin Resources and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Resources and Travelers Companies
The main advantage of trading using opposite Franklin Resources and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Resources position performs unexpectedly, Travelers Companies 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 Travelers Companies will offset losses from the drop in Travelers Companies' long position.| Franklin Resources vs. BlackRock | Franklin Resources vs. Main Street Capital | Franklin Resources vs. Blackstone Group | Franklin Resources vs. Ares Capital |
| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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