Correlation Between Franklin Convertible and Columbia Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin Convertible and Columbia Convertible 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 Convertible and Columbia Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Vertible Securities and Columbia Vertible Securities, you can compare the effects of market volatilities on Franklin Convertible and Columbia Convertible 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 Convertible with a short position of Columbia Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Convertible and Columbia Convertible.
Diversification Opportunities for Franklin Convertible and Columbia Convertible
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Columbia is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Columbia Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Convertible and Franklin Convertible 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 Vertible Securities are associated (or correlated) with Columbia Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Convertible has no effect on the direction of Franklin Convertible i.e., Franklin Convertible and Columbia Convertible go up and down completely randomly.
Pair Corralation between Franklin Convertible and Columbia Convertible
Assuming the 90 days horizon Franklin Vertible Securities is expected to generate 1.07 times more return on investment than Columbia Convertible. However, Franklin Convertible is 1.07 times more volatile than Columbia Vertible Securities. It trades about 0.38 of its potential returns per unit of risk. Columbia Vertible Securities is currently generating about 0.36 per unit of risk. If you would invest 2,290 in Franklin Vertible Securities on August 24, 2024 and sell it today you would earn a total of 102.00 from holding Franklin Vertible Securities or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Franklin Vertible Securities vs. Columbia Vertible Securities
Performance |
| Timeline |
| Franklin Convertible |
| Columbia Convertible |
Franklin Convertible and Columbia Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Convertible and Columbia Convertible
The main advantage of trading using opposite Franklin Convertible and Columbia Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Convertible position performs unexpectedly, Columbia Convertible 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 Columbia Convertible will offset losses from the drop in Columbia Convertible's long position.| Franklin Convertible vs. Franklin Equity Income | Franklin Convertible vs. Franklin Utilities Fund | Franklin Convertible vs. Franklin Strategic Income | Franklin Convertible vs. Franklin Rising Dividends |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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