Correlation Between Franklin Income and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Franklin Income and Baillie Gifford 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 Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Income and Baillie Gifford Health, you can compare the effects of market volatilities on Franklin Income and Baillie Gifford 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 Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Income and Baillie Gifford.
Diversification Opportunities for Franklin Income and Baillie Gifford
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Baillie is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Income and Baillie Gifford Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Health 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 are associated (or correlated) with Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Health has no effect on the direction of Franklin Income i.e., Franklin Income and Baillie Gifford go up and down completely randomly.
Pair Corralation between Franklin Income and Baillie Gifford
Assuming the 90 days horizon Franklin Income is expected to generate 0.31 times more return on investment than Baillie Gifford. However, Franklin Income is 3.27 times less risky than Baillie Gifford. It trades about 0.08 of its potential returns per unit of risk. Baillie Gifford Health is currently generating about -0.01 per unit of risk. If you would invest 203.00 in Franklin Income on September 12, 2024 and sell it today you would earn a total of 37.00 from holding Franklin Income or generate 18.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Income vs. Baillie Gifford Health
Performance |
| Timeline |
| Franklin Income |
| Baillie Gifford Health |
Franklin Income and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Income and Baillie Gifford
The main advantage of trading using opposite Franklin Income and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Income position performs unexpectedly, Baillie Gifford 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 Baillie Gifford will offset losses from the drop in Baillie Gifford's long position.| Franklin Income vs. Ab Bond Inflation | Franklin Income vs. Ab Bond Inflation | Franklin Income vs. Lord Abbett Inflation | Franklin Income vs. Atac Inflation Rotation |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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