Correlation Between Franklin High and Energy Basic
Can any of the company-specific risk be diversified away by investing in both Franklin High and Energy Basic 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 Energy Basic 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 Energy Basic Materials, you can compare the effects of market volatilities on Franklin High and Energy Basic 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 Energy Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Energy Basic.
Diversification Opportunities for Franklin High and Energy Basic
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Energy is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Energy Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Basic Materials 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 Energy Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Basic Materials has no effect on the direction of Franklin High i.e., Franklin High and Energy Basic go up and down completely randomly.
Pair Corralation between Franklin High and Energy Basic
Assuming the 90 days horizon Franklin High Yield is expected to generate 0.3 times more return on investment than Energy Basic. However, Franklin High Yield is 3.3 times less risky than Energy Basic. It trades about -0.32 of its potential returns per unit of risk. Energy Basic Materials is currently generating about -0.49 per unit of risk. If you would invest 913.00 in Franklin High Yield on September 27, 2024 and sell it today you would lose (18.00) from holding Franklin High Yield or give up 1.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Energy Basic Materials
Performance |
| Timeline |
| Franklin High Yield |
| Energy Basic Materials |
Franklin High and Energy Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Energy Basic
The main advantage of trading using opposite Franklin High and Energy Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Energy Basic 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 Energy Basic will offset losses from the drop in Energy Basic's long position.| Franklin High vs. Valic Company I | Franklin High vs. Ab Small Cap | Franklin High vs. Omni Small Cap Value | Franklin High vs. Small Cap Value Fund |
| Energy Basic vs. Dws Government Money | Energy Basic vs. T Rowe Price | Energy Basic vs. Ab Impact Municipal | Energy Basic vs. Franklin 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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