Correlation Between Sterling Capital and Franklin New
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Franklin New 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 New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Short and Franklin New York, you can compare the effects of market volatilities on Sterling Capital and Franklin New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Franklin New.
Diversification Opportunities for Sterling Capital and Franklin New
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sterling and Franklin is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York 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 Short are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of Sterling Capital i.e., Sterling Capital and Franklin New go up and down completely randomly.
Pair Corralation between Sterling Capital and Franklin New
Assuming the 90 days horizon Sterling Capital is expected to generate 12.82 times less return on investment than Franklin New. But when comparing it to its historical volatility, Sterling Capital Short is 4.04 times less risky than Franklin New. It trades about 0.06 of its potential returns per unit of risk. Franklin New York is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 996.00 in Franklin New York on September 1, 2024 and sell it today you would earn a total of 16.00 from holding Franklin New York or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sterling Capital Short vs. Franklin New York
Performance |
| Timeline |
| Sterling Capital Short |
| Franklin New York |
Sterling Capital and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Franklin New
The main advantage of trading using opposite Sterling Capital and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's long position.| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital South | Sterling Capital vs. Sterling Capital South |
| Franklin New vs. Franklin Mutual Beacon | Franklin New vs. Templeton Developing Markets | Franklin New vs. Franklin Mutual Global | Franklin New vs. Franklin Mutual Global |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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