Correlation Between Ford and Franklin Rising
Can any of the company-specific risk be diversified away by investing in both Ford and Franklin Rising 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 Ford and Franklin Rising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Franklin Rising Dividends, you can compare the effects of market volatilities on Ford and Franklin Rising 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 Ford with a short position of Franklin Rising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Franklin Rising.
Diversification Opportunities for Ford and Franklin Rising
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Franklin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Franklin Rising Dividends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Rising Dividends and Ford 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 Ford Motor are associated (or correlated) with Franklin Rising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Rising Dividends has no effect on the direction of Ford i.e., Ford and Franklin Rising go up and down completely randomly.
Pair Corralation between Ford and Franklin Rising
Taking into account the 90-day investment horizon Ford is expected to generate 1.65 times less return on investment than Franklin Rising. In addition to that, Ford is 3.05 times more volatile than Franklin Rising Dividends. It trades about 0.01 of its total potential returns per unit of risk. Franklin Rising Dividends is currently generating about 0.05 per unit of volatility. If you would invest 8,624 in Franklin Rising Dividends on August 31, 2024 and sell it today you would earn a total of 1,558 from holding Franklin Rising Dividends or generate 18.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Franklin Rising Dividends
Performance |
| Timeline |
| Ford Motor |
| Franklin Rising Dividends |
Ford and Franklin Rising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Franklin Rising
The main advantage of trading using opposite Ford and Franklin Rising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Franklin Rising 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 Rising will offset losses from the drop in Franklin Rising's long position.The idea behind Ford Motor and Franklin Rising Dividends pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Franklin Rising vs. John Hancock Money | Franklin Rising vs. Transamerica Funds | Franklin Rising vs. Prudential Government Money | Franklin Rising vs. American Century Investment |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |