Correlation Between Franklin Adjustable and Health Care
Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable and Health Care 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 Adjustable and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Adjustable Government and Health Care Fund, you can compare the effects of market volatilities on Franklin Adjustable and Health Care 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 Adjustable with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Health Care.
Diversification Opportunities for Franklin Adjustable and Health Care
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Health is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Health Care Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Fund and Franklin Adjustable 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 Adjustable Government are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Fund has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Health Care go up and down completely randomly.
Pair Corralation between Franklin Adjustable and Health Care
Assuming the 90 days horizon Franklin Adjustable is expected to generate 34.61 times less return on investment than Health Care. But when comparing it to its historical volatility, Franklin Adjustable Government is 10.2 times less risky than Health Care. It trades about 0.08 of its potential returns per unit of risk. Health Care Fund is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,909 in Health Care Fund on November 7, 2024 and sell it today you would earn a total of 136.00 from holding Health Care Fund or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Adjustable Government vs. Health Care Fund
Performance |
| Timeline |
| Franklin Adjustable |
| Health Care Fund |
Franklin Adjustable and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Adjustable and Health Care
The main advantage of trading using opposite Franklin Adjustable and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Adjustable position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Franklin Adjustable vs. Rbc Small Cap | Franklin Adjustable vs. United Kingdom Small | Franklin Adjustable vs. Rbc International Small | Franklin Adjustable vs. Cardinal Small Cap |
| Health Care vs. Rbc Bluebay Global | Health Care vs. Siit High Yield | Health Care vs. Pace High Yield | Health Care vs. Nuveen California High |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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