Correlation Between Franklin New and Iaadx
Can any of the company-specific risk be diversified away by investing in both Franklin New and Iaadx 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 New and Iaadx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin New York and Iaadx, you can compare the effects of market volatilities on Franklin New and Iaadx 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 New with a short position of Iaadx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin New and Iaadx.
Diversification Opportunities for Franklin New and Iaadx
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Iaadx is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Franklin New York and Iaadx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iaadx and Franklin New 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 New York are associated (or correlated) with Iaadx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iaadx has no effect on the direction of Franklin New i.e., Franklin New and Iaadx go up and down completely randomly.
Pair Corralation between Franklin New and Iaadx
Assuming the 90 days horizon Franklin New is expected to generate 2.55 times less return on investment than Iaadx. But when comparing it to its historical volatility, Franklin New York is 1.66 times less risky than Iaadx. It trades about 0.2 of its potential returns per unit of risk. Iaadx is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 909.00 in Iaadx on November 27, 2024 and sell it today you would earn a total of 13.00 from holding Iaadx or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin New York vs. Iaadx
Performance |
| Timeline |
| Franklin New York |
| Iaadx |
Franklin New and Iaadx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin New and Iaadx
The main advantage of trading using opposite Franklin New and Iaadx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin New position performs unexpectedly, Iaadx 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 Iaadx will offset losses from the drop in Iaadx's long position.| Franklin New vs. Blackrock Science Technology | Franklin New vs. Dreyfus Technology Growth | Franklin New vs. Red Oak Technology | Franklin New vs. Firsthand Technology Opportunities |
| Iaadx vs. Commodities Strategy Fund | Iaadx vs. Fidelity Advisor Emerging | Iaadx vs. Pace International Emerging | Iaadx vs. Pace International Emerging |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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