Correlation Between Franklin High and Inverse Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both Franklin High and Inverse Nasdaq-100 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 Inverse Nasdaq-100 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 Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Franklin High and Inverse Nasdaq-100 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 Inverse Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Inverse Nasdaq-100.
Diversification Opportunities for Franklin High and Inverse Nasdaq-100
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Inverse is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 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 Inverse Nasdaq-100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Franklin High i.e., Franklin High and Inverse Nasdaq-100 go up and down completely randomly.
Pair Corralation between Franklin High and Inverse Nasdaq-100
Assuming the 90 days horizon Franklin High Income is expected to generate 0.22 times more return on investment than Inverse Nasdaq-100. However, Franklin High Income is 4.57 times less risky than Inverse Nasdaq-100. It trades about 0.0 of its potential returns per unit of risk. Inverse Nasdaq 100 Strategy is currently generating about -0.07 per unit of risk. If you would invest 175.00 in Franklin High Income on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Franklin High Income or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Income vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
| Franklin High Income |
| Inverse Nasdaq 100 |
Franklin High and Inverse Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Inverse Nasdaq-100
The main advantage of trading using opposite Franklin High and Inverse Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Inverse Nasdaq-100 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 Inverse Nasdaq-100 will offset losses from the drop in Inverse Nasdaq-100's long position.| Franklin High vs. Conservative Balanced Allocation | Franklin High vs. Calvert Conservative Allocation | Franklin High vs. Delaware Limited Term Diversified | Franklin High vs. Adams Diversified Equity |
| Inverse Nasdaq-100 vs. Scharf Global Opportunity | Inverse Nasdaq-100 vs. Artisan Global Unconstrained | Inverse Nasdaq-100 vs. Commonwealth Global Fund | Inverse Nasdaq-100 vs. Rbb Fund Trust |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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