Correlation Between Franklin High and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Franklin High and Sterling Capital 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 High and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Income and Sterling Capital Special, you can compare the effects of market volatilities on Franklin High and Sterling Capital 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 High with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Sterling Capital.
Diversification Opportunities for Franklin High and Sterling Capital
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Sterling is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Sterling Capital Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Special and Franklin High 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 High Income are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Special has no effect on the direction of Franklin High i.e., Franklin High and Sterling Capital go up and down completely randomly.
Pair Corralation between Franklin High and Sterling Capital
Assuming the 90 days horizon Franklin High Income is expected to generate 0.24 times more return on investment than Sterling Capital. However, Franklin High Income is 4.22 times less risky than Sterling Capital. It trades about 0.09 of its potential returns per unit of risk. Sterling Capital Special is currently generating about -0.01 per unit of risk. If you would invest 146.00 in Franklin High Income on January 20, 2025 and sell it today you would earn a total of 25.00 from holding Franklin High Income or generate 17.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Income vs. Sterling Capital Special
Performance |
| Timeline |
| Franklin High Income |
| Sterling Capital Special |
Franklin High and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Sterling Capital
The main advantage of trading using opposite Franklin High and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Franklin High vs. Summit Global Investments | Franklin High vs. Rbc Funds Trust | Franklin High vs. Bbh Partner Fund | Franklin High vs. Harbor Large Cap |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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