Correlation Between Franklin High and Ivy High
Can any of the company-specific risk be diversified away by investing in both Franklin High and Ivy High 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 Ivy High 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 Ivy High Income, you can compare the effects of market volatilities on Franklin High and Ivy High 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 Ivy High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Ivy High.
Diversification Opportunities for Franklin High and Ivy High
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Ivy is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Ivy High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy High Income 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 Ivy High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy High Income has no effect on the direction of Franklin High i.e., Franklin High and Ivy High go up and down completely randomly.
Pair Corralation between Franklin High and Ivy High
Assuming the 90 days horizon Franklin High Income is expected to generate 0.87 times more return on investment than Ivy High. However, Franklin High Income is 1.15 times less risky than Ivy High. It trades about 0.11 of its potential returns per unit of risk. Ivy High Income is currently generating about 0.09 per unit of risk. If you would invest 145.00 in Franklin High Income on September 1, 2024 and sell it today you would earn a total of 30.00 from holding Franklin High Income or generate 20.69% 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. Ivy High Income
Performance |
| Timeline |
| Franklin High Income |
| Ivy High Income |
Franklin High and Ivy High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Ivy High
The main advantage of trading using opposite Franklin High and Ivy High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Ivy High 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 Ivy High will offset losses from the drop in Ivy High's long position.| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
| Ivy High vs. California High Yield Municipal | Ivy High vs. Morningstar Aggressive Growth | Ivy High vs. Franklin High Income | Ivy High vs. Western Asset 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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