Correlation Between Black Oak and Franklin Moderate
Can any of the company-specific risk be diversified away by investing in both Black Oak and Franklin Moderate 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 Black Oak and Franklin Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Oak Emerging and Franklin Moderate Allocation, you can compare the effects of market volatilities on Black Oak and Franklin Moderate 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 Black Oak with a short position of Franklin Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Oak and Franklin Moderate.
Diversification Opportunities for Black Oak and Franklin Moderate
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Black and Franklin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Black Oak Emerging and Franklin Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Moderate and Black Oak 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 Black Oak Emerging are associated (or correlated) with Franklin Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Moderate has no effect on the direction of Black Oak i.e., Black Oak and Franklin Moderate go up and down completely randomly.
Pair Corralation between Black Oak and Franklin Moderate
Assuming the 90 days horizon Black Oak Emerging is expected to generate 2.54 times more return on investment than Franklin Moderate. However, Black Oak is 2.54 times more volatile than Franklin Moderate Allocation. It trades about 0.05 of its potential returns per unit of risk. Franklin Moderate Allocation is currently generating about 0.11 per unit of risk. If you would invest 639.00 in Black Oak Emerging on September 13, 2024 and sell it today you would earn a total of 186.00 from holding Black Oak Emerging or generate 29.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Oak Emerging vs. Franklin Moderate Allocation
Performance |
| Timeline |
| Black Oak Emerging |
| Franklin Moderate |
Black Oak and Franklin Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Oak and Franklin Moderate
The main advantage of trading using opposite Black Oak and Franklin Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Oak position performs unexpectedly, Franklin Moderate 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 Moderate will offset losses from the drop in Franklin Moderate's long position.| Black Oak vs. Red Oak Technology | Black Oak vs. Pin Oak Equity | Black Oak vs. White Oak Select | Black Oak vs. Live Oak Health |
| Franklin Moderate vs. Nasdaq 100 2x Strategy | Franklin Moderate vs. Black Oak Emerging | Franklin Moderate vs. Mid Cap 15x Strategy | Franklin Moderate vs. Artisan Emerging Markets |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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