Correlation Between Baron Health and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Baron Health and Franklin Utilities 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 Baron Health and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Health Care and Franklin Utilities Fund, you can compare the effects of market volatilities on Baron Health and Franklin Utilities 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 Baron Health with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Franklin Utilities.
Diversification Opportunities for Baron Health and Franklin Utilities
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and Franklin is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Baron Health 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 Baron Health Care are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Baron Health i.e., Baron Health and Franklin Utilities go up and down completely randomly.
Pair Corralation between Baron Health and Franklin Utilities
Assuming the 90 days horizon Baron Health Care is expected to under-perform the Franklin Utilities. In addition to that, Baron Health is 1.03 times more volatile than Franklin Utilities Fund. It trades about -0.16 of its total potential returns per unit of risk. Franklin Utilities Fund is currently generating about -0.02 per unit of volatility. If you would invest 2,484 in Franklin Utilities Fund on September 15, 2024 and sell it today you would lose (10.00) from holding Franklin Utilities Fund or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Franklin Utilities Fund
Performance |
| Timeline |
| Baron Health Care |
| Franklin Utilities |
Baron Health and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Franklin Utilities
The main advantage of trading using opposite Baron Health and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Franklin Utilities 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 Utilities will offset losses from the drop in Franklin Utilities' long position.| Baron Health vs. Multisector Bond Sma | Baron Health vs. T Rowe Price | Baron Health vs. Touchstone Premium Yield | Baron Health vs. Alliancebernstein National Municipal |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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