Correlation Between Franklin New and Wilmington New
Can any of the company-specific risk be diversified away by investing in both Franklin New and Wilmington New 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 Wilmington New 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 Wilmington New York, you can compare the effects of market volatilities on Franklin New and Wilmington New 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 Wilmington New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin New and Wilmington New.
Diversification Opportunities for Franklin New and Wilmington New
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and Wilmington is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin New York and Wilmington New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington New York 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 Wilmington New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington New York has no effect on the direction of Franklin New i.e., Franklin New and Wilmington New go up and down completely randomly.
Pair Corralation between Franklin New and Wilmington New
Assuming the 90 days horizon Franklin New is expected to generate 1.2 times less return on investment than Wilmington New. But when comparing it to its historical volatility, Franklin New York is 1.1 times less risky than Wilmington New. It trades about 0.2 of its potential returns per unit of risk. Wilmington New York is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 979.00 in Wilmington New York on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Wilmington New York or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin New York vs. Wilmington New York
Performance |
| Timeline |
| Franklin New York |
| Wilmington New York |
Franklin New and Wilmington New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin New and Wilmington New
The main advantage of trading using opposite Franklin New and Wilmington New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin New position performs unexpectedly, Wilmington New 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 Wilmington New will offset losses from the drop in Wilmington New's long position.| Franklin New vs. T Rowe Price | Franklin New vs. Oklahoma Municipal Fund | Franklin New vs. T Rowe Price | Franklin New vs. Multisector Bond Sma |
| Wilmington New vs. Wilmington Global Alpha | Wilmington New vs. Wilmington Global Alpha | Wilmington New vs. Wilmington Broad Market | Wilmington New vs. Wilmington Municipal Bond |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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