Correlation Between Franklin Adjustable and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable and Sterling Capital 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 Adjustable and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Adjustable Government and Sterling Capital North, you can compare the effects of market volatilities on Franklin Adjustable and Sterling Capital 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 Adjustable with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Sterling Capital.
Diversification Opportunities for Franklin Adjustable and Sterling Capital
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Sterling is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Sterling Capital North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital North and Franklin Adjustable 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 Adjustable Government are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital North has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Sterling Capital go up and down completely randomly.
Pair Corralation between Franklin Adjustable and Sterling Capital
Assuming the 90 days horizon Franklin Adjustable is expected to generate 2.25 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Franklin Adjustable Government is 2.02 times less risky than Sterling Capital. It trades about 0.03 of its potential returns per unit of risk. Sterling Capital North is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,013 in Sterling Capital North on September 13, 2024 and sell it today you would earn a total of 3.00 from holding Sterling Capital North or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Adjustable Government vs. Sterling Capital North
Performance |
| Timeline |
| Franklin Adjustable |
| Sterling Capital North |
Franklin Adjustable and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Adjustable and Sterling Capital
The main advantage of trading using opposite Franklin Adjustable and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Adjustable position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Franklin Adjustable vs. Franklin Mutual Beacon | Franklin Adjustable vs. Templeton Developing Markets | Franklin Adjustable vs. Franklin Mutual Global | Franklin Adjustable vs. Franklin Mutual Global |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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