Correlation Between Franklin High and Steelpath Select
Can any of the company-specific risk be diversified away by investing in both Franklin High and Steelpath 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 High and Steelpath Select 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 Steelpath Select 40, you can compare the effects of market volatilities on Franklin High and Steelpath 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 High with a short position of Steelpath Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Steelpath Select.
Diversification Opportunities for Franklin High and Steelpath Select
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Steelpath is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Steelpath Select 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelpath Select 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 Steelpath Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelpath Select has no effect on the direction of Franklin High i.e., Franklin High and Steelpath Select go up and down completely randomly.
Pair Corralation between Franklin High and Steelpath Select
Assuming the 90 days horizon Franklin High is expected to generate 4.3 times less return on investment than Steelpath Select. But when comparing it to its historical volatility, Franklin High Yield is 2.56 times less risky than Steelpath Select. It trades about 0.08 of its potential returns per unit of risk. Steelpath Select 40 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 472.00 in Steelpath Select 40 on August 27, 2024 and sell it today you would earn a total of 307.00 from holding Steelpath Select 40 or generate 65.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Steelpath Select 40
Performance |
| Timeline |
| Franklin High Yield |
| Steelpath Select |
Franklin High and Steelpath Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Steelpath Select
The main advantage of trading using opposite Franklin High and Steelpath Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Steelpath 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 Steelpath Select will offset losses from the drop in Steelpath Select's long position.| Franklin High vs. Dunham Real Estate | Franklin High vs. Great West Real Estate | Franklin High vs. Amg Managers Centersquare | Franklin High vs. Neuberger Berman Real |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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