Correlation Between Df Dent and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Df Dent 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 Df Dent and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Df Dent Small and Franklin Utilities, you can compare the effects of market volatilities on Df Dent 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 Df Dent with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Df Dent and Franklin Utilities.
Diversification Opportunities for Df Dent and Franklin Utilities
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DFDSX and Franklin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Df Dent Small and Franklin Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Df Dent 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 Df Dent Small 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 Df Dent i.e., Df Dent and Franklin Utilities go up and down completely randomly.
Pair Corralation between Df Dent and Franklin Utilities
Assuming the 90 days horizon Df Dent Small is expected to generate 1.12 times more return on investment than Franklin Utilities. However, Df Dent is 1.12 times more volatile than Franklin Utilities. It trades about 0.07 of its potential returns per unit of risk. Franklin Utilities is currently generating about 0.04 per unit of risk. If you would invest 1,814 in Df Dent Small on September 13, 2024 and sell it today you would earn a total of 819.00 from holding Df Dent Small or generate 45.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Df Dent Small vs. Franklin Utilities
Performance |
| Timeline |
| Df Dent Small |
| Franklin Utilities |
Df Dent and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Df Dent and Franklin Utilities
The main advantage of trading using opposite Df Dent and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Df Dent 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.| Df Dent vs. Virtus Multi Sector Short | Df Dent vs. Aqr Long Short Equity | Df Dent vs. Lord Abbett Short | Df Dent vs. Franklin Federal Limited Term |
| Franklin Utilities vs. Scout Small Cap | Franklin Utilities vs. Df Dent Small | Franklin Utilities vs. Siit Small Mid | Franklin Utilities vs. Glg Intl Small |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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