Correlation Between Franklin Income and Alternative Asset
Can any of the company-specific risk be diversified away by investing in both Franklin Income and Alternative Asset 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 Income and Alternative Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Income Fund and Alternative Asset Allocation, you can compare the effects of market volatilities on Franklin Income and Alternative Asset 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 Income with a short position of Alternative Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Income and Alternative Asset.
Diversification Opportunities for Franklin Income and Alternative Asset
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Alternative is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Income Fund and Alternative Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Asset and Franklin Income 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 Income Fund are associated (or correlated) with Alternative Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Asset has no effect on the direction of Franklin Income i.e., Franklin Income and Alternative Asset go up and down completely randomly.
Pair Corralation between Franklin Income and Alternative Asset
Assuming the 90 days horizon Franklin Income Fund is expected to generate 1.61 times more return on investment than Alternative Asset. However, Franklin Income is 1.61 times more volatile than Alternative Asset Allocation. It trades about 0.27 of its potential returns per unit of risk. Alternative Asset Allocation is currently generating about 0.35 per unit of risk. If you would invest 240.00 in Franklin Income Fund on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Franklin Income Fund or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Income Fund vs. Alternative Asset Allocation
Performance |
| Timeline |
| Franklin Income |
| Alternative Asset |
Franklin Income and Alternative Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Income and Alternative Asset
The main advantage of trading using opposite Franklin Income and Alternative Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Income position performs unexpectedly, Alternative Asset 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 Alternative Asset will offset losses from the drop in Alternative Asset's long position.| Franklin Income vs. Alternative Asset Allocation | Franklin Income vs. Strategic Allocation Aggressive | Franklin Income vs. Jhancock Disciplined Value | Franklin Income vs. T Rowe Price |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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