Correlation Between Franklin Dynatech and Aam Select
Can any of the company-specific risk be diversified away by investing in both Franklin Dynatech and Aam Select 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 Dynatech and Aam Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Dynatech Fund and Aam Select Income, you can compare the effects of market volatilities on Franklin Dynatech and Aam Select 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 Dynatech with a short position of Aam Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Dynatech and Aam Select.
Diversification Opportunities for Franklin Dynatech and Aam Select
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Aam is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Dynatech Fund and Aam Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aam Select Income and Franklin Dynatech 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 Dynatech Fund are associated (or correlated) with Aam Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aam Select Income has no effect on the direction of Franklin Dynatech i.e., Franklin Dynatech and Aam Select go up and down completely randomly.
Pair Corralation between Franklin Dynatech and Aam Select
Assuming the 90 days horizon Franklin Dynatech Fund is expected to generate 3.69 times more return on investment than Aam Select. However, Franklin Dynatech is 3.69 times more volatile than Aam Select Income. It trades about 0.1 of its potential returns per unit of risk. Aam Select Income is currently generating about 0.09 per unit of risk. If you would invest 12,364 in Franklin Dynatech Fund on September 4, 2024 and sell it today you would earn a total of 4,614 from holding Franklin Dynatech Fund or generate 37.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Dynatech Fund vs. Aam Select Income
Performance |
| Timeline |
| Franklin Dynatech |
| Aam Select Income |
Franklin Dynatech and Aam Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Dynatech and Aam Select
The main advantage of trading using opposite Franklin Dynatech and Aam Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Dynatech position performs unexpectedly, Aam Select 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 Aam Select will offset losses from the drop in Aam Select's long position.| Franklin Dynatech vs. American Funds Inflation | Franklin Dynatech vs. Ab Bond Inflation | Franklin Dynatech vs. Goldman Sachs Managed | Franklin Dynatech vs. Ab Bond Inflation |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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