Correlation Between Brompton European and Franklin Global
Can any of the company-specific risk be diversified away by investing in both Brompton European and Franklin Global 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 Brompton European and Franklin Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brompton European Dividend and Franklin Global Aggregate, you can compare the effects of market volatilities on Brompton European and Franklin Global 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 Brompton European with a short position of Franklin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and Franklin Global.
Diversification Opportunities for Brompton European and Franklin Global
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brompton and Franklin is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Franklin Global Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Global Aggregate and Brompton European 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 Brompton European Dividend are associated (or correlated) with Franklin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Global Aggregate has no effect on the direction of Brompton European i.e., Brompton European and Franklin Global go up and down completely randomly.
Pair Corralation between Brompton European and Franklin Global
Assuming the 90 days trading horizon Brompton European Dividend is expected to generate 2.46 times more return on investment than Franklin Global. However, Brompton European is 2.46 times more volatile than Franklin Global Aggregate. It trades about 0.05 of its potential returns per unit of risk. Franklin Global Aggregate is currently generating about 0.04 per unit of risk. If you would invest 901.00 in Brompton European Dividend on August 29, 2024 and sell it today you would earn a total of 152.00 from holding Brompton European Dividend or generate 16.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton European Dividend vs. Franklin Global Aggregate
Performance |
| Timeline |
| Brompton European |
| Franklin Global Aggregate |
Brompton European and Franklin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and Franklin Global
The main advantage of trading using opposite Brompton European and Franklin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European position performs unexpectedly, Franklin Global 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 Global will offset losses from the drop in Franklin Global's long position.| Brompton European vs. Global Atomic Corp | Brompton European vs. enCore Energy Corp | Brompton European vs. Fission Uranium Corp | Brompton European vs. NexGen Energy |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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