Correlation Between Franklin Adjustable and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable and Prudential Financial 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 Prudential Financial 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 Prudential Financial Services, you can compare the effects of market volatilities on Franklin Adjustable and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Prudential Financial.
Diversification Opportunities for Franklin Adjustable and Prudential Financial
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Prudential is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Prudential Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Prudential Financial go up and down completely randomly.
Pair Corralation between Franklin Adjustable and Prudential Financial
Assuming the 90 days horizon Franklin Adjustable is expected to generate 6.56 times less return on investment than Prudential Financial. But when comparing it to its historical volatility, Franklin Adjustable Government is 8.94 times less risky than Prudential Financial. It trades about 0.18 of its potential returns per unit of risk. Prudential Financial Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,779 in Prudential Financial Services on September 14, 2024 and sell it today you would earn a total of 752.00 from holding Prudential Financial Services or generate 42.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Adjustable Government vs. Prudential Financial Services
Performance |
| Timeline |
| Franklin Adjustable |
| Prudential Financial |
Franklin Adjustable and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Adjustable and Prudential Financial
The main advantage of trading using opposite Franklin Adjustable and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Adjustable position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial'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 |
| Prudential Financial vs. Aig Government Money | Prudential Financial vs. Franklin Adjustable Government | Prudential Financial vs. Elfun Government Money | Prudential Financial vs. Schwab Government Money |
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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