Correlation Between Dominion Energy and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Dominion Energy and Franklin Utilities 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 Dominion Energy and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominion Energy and Franklin Utilities Fund, you can compare the effects of market volatilities on Dominion Energy and Franklin Utilities 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 Dominion Energy with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominion Energy and Franklin Utilities.
Diversification Opportunities for Dominion Energy and Franklin Utilities
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dominion and Franklin is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Dominion Energy 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 Dominion Energy are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Dominion Energy i.e., Dominion Energy and Franklin Utilities go up and down completely randomly.
Pair Corralation between Dominion Energy and Franklin Utilities
Taking into account the 90-day investment horizon Dominion Energy is expected to generate 1.43 times less return on investment than Franklin Utilities. In addition to that, Dominion Energy is 1.43 times more volatile than Franklin Utilities Fund. It trades about 0.02 of its total potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.05 per unit of volatility. If you would invest 2,114 in Franklin Utilities Fund on August 30, 2024 and sell it today you would earn a total of 511.00 from holding Franklin Utilities Fund or generate 24.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominion Energy vs. Franklin Utilities Fund
Performance |
| Timeline |
| Dominion Energy |
| Franklin Utilities |
Dominion Energy and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominion Energy and Franklin Utilities
The main advantage of trading using opposite Dominion Energy and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominion Energy position performs unexpectedly, Franklin Utilities 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 Utilities will offset losses from the drop in Franklin Utilities' long position.| Dominion Energy vs. Southern Company | Dominion Energy vs. American Electric Power | Dominion Energy vs. Nextera Energy | Dominion Energy vs. Consolidated Edison |
| Franklin Utilities vs. Versatile Bond Portfolio | Franklin Utilities vs. John Hancock Money | Franklin Utilities vs. Mesirow Financial Small | Franklin Utilities vs. Bbh Intermediate Municipal |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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