Correlation Between Franklin Credit and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Franklin Credit and Ambev SA 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 Franklin Credit and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Credit Management and Ambev SA ADR, you can compare the effects of market volatilities on Franklin Credit and Ambev SA 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 Franklin Credit with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Credit and Ambev SA.
Diversification Opportunities for Franklin Credit and Ambev SA
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Ambev is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Credit Management and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR and Franklin Credit 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 Franklin Credit Management are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Franklin Credit i.e., Franklin Credit and Ambev SA go up and down completely randomly.
Pair Corralation between Franklin Credit and Ambev SA
Given the investment horizon of 90 days Franklin Credit Management is expected to generate 7.62 times more return on investment than Ambev SA. However, Franklin Credit is 7.62 times more volatile than Ambev SA ADR. It trades about 0.03 of its potential returns per unit of risk. Ambev SA ADR is currently generating about -0.02 per unit of risk. If you would invest 30.00 in Franklin Credit Management on September 2, 2024 and sell it today you would lose (19.00) from holding Franklin Credit Management or give up 63.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Credit Management vs. Ambev SA ADR
Performance |
| Timeline |
| Franklin Credit Mana |
| Ambev SA ADR |
Franklin Credit and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Credit and Ambev SA
The main advantage of trading using opposite Franklin Credit and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Credit position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Franklin Credit vs. Global Healthcare REIT | Franklin Credit vs. Freedom Bank of | Franklin Credit vs. Hinto Energy | Franklin Credit vs. Ensurge |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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