Correlation Between Buffalo Mid and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Buffalo Mid and Franklin Convertible 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 Buffalo Mid and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buffalo Mid Cap and Franklin Vertible Securities, you can compare the effects of market volatilities on Buffalo Mid and Franklin Convertible 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 Buffalo Mid with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo Mid and Franklin Convertible.
Diversification Opportunities for Buffalo Mid and Franklin Convertible
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Buffalo and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo Mid Cap and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and Buffalo Mid 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 Buffalo Mid Cap are associated (or correlated) with Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of Buffalo Mid i.e., Buffalo Mid and Franklin Convertible go up and down completely randomly.
Pair Corralation between Buffalo Mid and Franklin Convertible
Assuming the 90 days horizon Buffalo Mid Cap is expected to generate 1.61 times more return on investment than Franklin Convertible. However, Buffalo Mid is 1.61 times more volatile than Franklin Vertible Securities. It trades about 0.06 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.05 per unit of risk. If you would invest 1,419 in Buffalo Mid Cap on August 26, 2024 and sell it today you would earn a total of 429.00 from holding Buffalo Mid Cap or generate 30.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buffalo Mid Cap vs. Franklin Vertible Securities
Performance |
| Timeline |
| Buffalo Mid Cap |
| Franklin Convertible |
Buffalo Mid and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buffalo Mid and Franklin Convertible
The main advantage of trading using opposite Buffalo Mid and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo Mid position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.| Buffalo Mid vs. Franklin Vertible Securities | Buffalo Mid vs. Allianzgi Convertible Income | Buffalo Mid vs. Calamos Dynamic Convertible | Buffalo Mid vs. Harbor Vertible Securities |
| Franklin Convertible vs. Franklin Strategic Income | Franklin Convertible vs. Franklin Rising Dividends | Franklin Convertible vs. Franklin Natural Resources | Franklin Convertible vs. Aquagold International |
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 Stocks Directory module to find actively traded stocks across global markets.
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