Correlation Between Barings Global and Franklin Dynatech
Can any of the company-specific risk be diversified away by investing in both Barings Global and Franklin Dynatech 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 Barings Global and Franklin Dynatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Global Floating and Franklin Dynatech Fund, you can compare the effects of market volatilities on Barings Global and Franklin Dynatech 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 Barings Global with a short position of Franklin Dynatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Franklin Dynatech.
Diversification Opportunities for Barings Global and Franklin Dynatech
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barings and Franklin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and Franklin Dynatech Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Dynatech and Barings Global 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 Barings Global Floating are associated (or correlated) with Franklin Dynatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Dynatech has no effect on the direction of Barings Global i.e., Barings Global and Franklin Dynatech go up and down completely randomly.
Pair Corralation between Barings Global and Franklin Dynatech
Assuming the 90 days horizon Barings Global is expected to generate 4.08 times less return on investment than Franklin Dynatech. But when comparing it to its historical volatility, Barings Global Floating is 8.17 times less risky than Franklin Dynatech. It trades about 0.21 of its potential returns per unit of risk. Franklin Dynatech Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12,908 in Franklin Dynatech Fund on September 4, 2024 and sell it today you would earn a total of 4,860 from holding Franklin Dynatech Fund or generate 37.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Barings Global Floating vs. Franklin Dynatech Fund
Performance |
| Timeline |
| Barings Global Floating |
| Franklin Dynatech |
Barings Global and Franklin Dynatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Global and Franklin Dynatech
The main advantage of trading using opposite Barings Global and Franklin Dynatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global position performs unexpectedly, Franklin Dynatech 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 Dynatech will offset losses from the drop in Franklin Dynatech's long position.| Barings Global vs. Dreyfusstandish Global Fixed | Barings Global vs. Morningstar Global Income | Barings Global vs. Franklin Mutual Global | Barings Global vs. Ab Global Real |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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