Correlation Between Franklin Credit and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Franklin Credit and NETGEAR 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 NETGEAR 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 NETGEAR, you can compare the effects of market volatilities on Franklin Credit and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Credit and NETGEAR.
Diversification Opportunities for Franklin Credit and NETGEAR
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and NETGEAR is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Credit Management and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Franklin Credit i.e., Franklin Credit and NETGEAR go up and down completely randomly.
Pair Corralation between Franklin Credit and NETGEAR
Given the investment horizon of 90 days Franklin Credit Management is expected to generate 4.32 times more return on investment than NETGEAR. However, Franklin Credit is 4.32 times more volatile than NETGEAR. It trades about 0.04 of its potential returns per unit of risk. NETGEAR is currently generating about 0.06 per unit of risk. If you would invest 21.00 in Franklin Credit Management on August 28, 2024 and sell it today you would lose (10.00) from holding Franklin Credit Management or give up 47.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Franklin Credit Management vs. NETGEAR
Performance |
| Timeline |
| Franklin Credit Mana |
| NETGEAR |
Franklin Credit and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Credit and NETGEAR
The main advantage of trading using opposite Franklin Credit and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Credit position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| Franklin Credit vs. Invesco High Income | Franklin Credit vs. Blackrock Muniholdings Ny | Franklin Credit vs. MFS Investment Grade | Franklin Credit vs. Federated Premier Municipal |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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