Correlation Between Franklin High and Dnyax
Can any of the company-specific risk be diversified away by investing in both Franklin High and Dnyax 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 Dnyax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Yield and Dnyax, you can compare the effects of market volatilities on Franklin High and Dnyax 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 Dnyax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Dnyax.
Diversification Opportunities for Franklin High and Dnyax
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Dnyax is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Dnyax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dnyax 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 Yield are associated (or correlated) with Dnyax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dnyax has no effect on the direction of Franklin High i.e., Franklin High and Dnyax go up and down completely randomly.
Pair Corralation between Franklin High and Dnyax
Assuming the 90 days horizon Franklin High Yield is expected to generate 1.35 times more return on investment than Dnyax. However, Franklin High is 1.35 times more volatile than Dnyax. It trades about 0.08 of its potential returns per unit of risk. Dnyax is currently generating about 0.1 per unit of risk. If you would invest 814.00 in Franklin High Yield on September 3, 2024 and sell it today you would earn a total of 103.00 from holding Franklin High Yield or generate 12.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 27.47% |
| Values | Daily Returns |
Franklin High Yield vs. Dnyax
Performance |
| Timeline |
| Franklin High Yield |
| Dnyax |
Franklin High and Dnyax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Dnyax
The main advantage of trading using opposite Franklin High and Dnyax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Dnyax 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 Dnyax will offset losses from the drop in Dnyax's long position.| Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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