Correlation Between Dunham Large and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Dunham Large 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 Dunham Large and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Large Cap and Franklin Utilities, you can compare the effects of market volatilities on Dunham Large 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 Dunham Large with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Large and Franklin Utilities.
Diversification Opportunities for Dunham Large and Franklin Utilities
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dunham and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Large Cap and Franklin Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Dunham Large 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 Dunham Large Cap 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 Dunham Large i.e., Dunham Large and Franklin Utilities go up and down completely randomly.
Pair Corralation between Dunham Large and Franklin Utilities
Assuming the 90 days horizon Dunham Large is expected to generate 1.01 times less return on investment than Franklin Utilities. But when comparing it to its historical volatility, Dunham Large Cap is 1.36 times less risky than Franklin Utilities. It trades about 0.06 of its potential returns per unit of risk. Franklin Utilities is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,146 in Franklin Utilities on September 2, 2024 and sell it today you would earn a total of 451.00 from holding Franklin Utilities or generate 21.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Large Cap vs. Franklin Utilities
Performance |
| Timeline |
| Dunham Large Cap |
| Franklin Utilities |
Dunham Large and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Large and Franklin Utilities
The main advantage of trading using opposite Dunham Large and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Large 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.| Dunham Large vs. Dunham Dynamic Macro | Dunham Large vs. Dunham Appreciation Income | Dunham Large vs. Dunham Small Cap | Dunham Large vs. Dunham Emerging Markets |
| Franklin Utilities vs. Jhancock Disciplined Value | Franklin Utilities vs. Dunham Large Cap | Franklin Utilities vs. Fidelity Series 1000 | Franklin Utilities vs. Transamerica Large Cap |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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