Correlation Between Franklin Credit and Barings BDC
Can any of the company-specific risk be diversified away by investing in both Franklin Credit and Barings BDC 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 Barings BDC 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 Barings BDC, you can compare the effects of market volatilities on Franklin Credit and Barings BDC 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 Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Credit and Barings BDC.
Diversification Opportunities for Franklin Credit and Barings BDC
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Barings is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Credit Management and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC 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 Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of Franklin Credit i.e., Franklin Credit and Barings BDC go up and down completely randomly.
Pair Corralation between Franklin Credit and Barings BDC
Given the investment horizon of 90 days Franklin Credit Management is expected to generate 10.47 times more return on investment than Barings BDC. However, Franklin Credit is 10.47 times more volatile than Barings BDC. It trades about 0.04 of its potential returns per unit of risk. Barings BDC is currently generating about 0.07 per unit of risk. If you would invest 13.00 in Franklin Credit Management on September 1, 2024 and sell it today you would lose (2.00) from holding Franklin Credit Management or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Credit Management vs. Barings BDC
Performance |
| Timeline |
| Franklin Credit Mana |
| Barings BDC |
Franklin Credit and Barings BDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Credit and Barings BDC
The main advantage of trading using opposite Franklin Credit and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Credit position performs unexpectedly, Barings BDC 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 Barings BDC will offset losses from the drop in Barings BDC'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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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