Correlation Between Consumer Services and Franklin High
Can any of the company-specific risk be diversified away by investing in both Consumer Services and Franklin High 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 Consumer Services and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Services Ultrasector and Franklin High Yield, you can compare the effects of market volatilities on Consumer Services and Franklin High 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 Consumer Services with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Services and Franklin High.
Diversification Opportunities for Consumer Services and Franklin High
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Consumer and Franklin is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Services Ultrasector and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and Consumer Services 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 Consumer Services Ultrasector are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Consumer Services i.e., Consumer Services and Franklin High go up and down completely randomly.
Pair Corralation between Consumer Services and Franklin High
Assuming the 90 days horizon Consumer Services Ultrasector is expected to under-perform the Franklin High. In addition to that, Consumer Services is 8.01 times more volatile than Franklin High Yield. It trades about -0.09 of its total potential returns per unit of risk. Franklin High Yield is currently generating about -0.38 per unit of volatility. If you would invest 919.00 in Franklin High Yield on October 7, 2024 and sell it today you would lose (20.00) from holding Franklin High Yield or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Services Ultrasector vs. Franklin High Yield
Performance |
| Timeline |
| Consumer Services |
| Franklin High Yield |
Consumer Services and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Services and Franklin High
The main advantage of trading using opposite Consumer Services and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Services position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Consumer Services vs. Consumer Staples Portfolio | Consumer Services vs. Consumer Staples Portfolio | Consumer Services vs. Consumer Staples Portfolio | Consumer Services vs. Consumer Staples Portfolio |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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