Correlation Between Diamond Hill and Franklin Adjustable
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Franklin Adjustable 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 Diamond Hill and Franklin Adjustable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Mid and Franklin Adjustable Government, you can compare the effects of market volatilities on Diamond Hill and Franklin Adjustable 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 Diamond Hill with a short position of Franklin Adjustable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Franklin Adjustable.
Diversification Opportunities for Diamond Hill and Franklin Adjustable
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diamond and Franklin is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Mid and Franklin Adjustable Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Adjustable and Diamond Hill 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 Diamond Hill Mid are associated (or correlated) with Franklin Adjustable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Adjustable has no effect on the direction of Diamond Hill i.e., Diamond Hill and Franklin Adjustable go up and down completely randomly.
Pair Corralation between Diamond Hill and Franklin Adjustable
Assuming the 90 days horizon Diamond Hill Mid is expected to generate 7.94 times more return on investment than Franklin Adjustable. However, Diamond Hill is 7.94 times more volatile than Franklin Adjustable Government. It trades about 0.08 of its potential returns per unit of risk. Franklin Adjustable Government is currently generating about 0.17 per unit of risk. If you would invest 1,514 in Diamond Hill Mid on September 4, 2024 and sell it today you would earn a total of 413.00 from holding Diamond Hill Mid or generate 27.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Diamond Hill Mid vs. Franklin Adjustable Government
Performance |
| Timeline |
| Diamond Hill Mid |
| Franklin Adjustable |
Diamond Hill and Franklin Adjustable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Franklin Adjustable
The main advantage of trading using opposite Diamond Hill and Franklin Adjustable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Franklin Adjustable 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 Adjustable will offset losses from the drop in Franklin Adjustable's long position.| Diamond Hill vs. Absolute Convertible Arbitrage | Diamond Hill vs. Fidelity Sai Convertible | Diamond Hill vs. Lord Abbett Convertible | Diamond Hill vs. Virtus Convertible |
| Franklin Adjustable vs. Victory Rs Partners | Franklin Adjustable vs. Queens Road Small | Franklin Adjustable vs. Ab Discovery Value | Franklin Adjustable vs. Amg River Road |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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