Correlation Between Franklin Utilities and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Franklin Utilities and Touchstone Large 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 Utilities and Touchstone Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Utilities and Touchstone Large Cap, you can compare the effects of market volatilities on Franklin Utilities and Touchstone Large 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 Utilities with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Utilities and Touchstone Large.
Diversification Opportunities for Franklin Utilities and Touchstone Large
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Touchstone is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Utilities and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap and Franklin Utilities 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 Utilities are associated (or correlated) with Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Franklin Utilities i.e., Franklin Utilities and Touchstone Large go up and down completely randomly.
Pair Corralation between Franklin Utilities and Touchstone Large
Assuming the 90 days horizon Franklin Utilities is expected to under-perform the Touchstone Large. In addition to that, Franklin Utilities is 1.88 times more volatile than Touchstone Large Cap. It trades about -0.06 of its total potential returns per unit of risk. Touchstone Large Cap is currently generating about -0.09 per unit of volatility. If you would invest 2,040 in Touchstone Large Cap on September 12, 2024 and sell it today you would lose (19.00) from holding Touchstone Large Cap or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Utilities vs. Touchstone Large Cap
Performance |
| Timeline |
| Franklin Utilities |
| Touchstone Large Cap |
Franklin Utilities and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Utilities and Touchstone Large
The main advantage of trading using opposite Franklin Utilities and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Utilities position performs unexpectedly, Touchstone Large 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 Touchstone Large will offset losses from the drop in Touchstone Large's long position.| Franklin Utilities vs. Prudential Real Estate | Franklin Utilities vs. Short Real Estate | Franklin Utilities vs. Fidelity Real Estate | Franklin Utilities vs. Jhancock Real Estate |
| Touchstone Large vs. Jhancock Disciplined Value | Touchstone Large vs. Fidelity Series 1000 | Touchstone Large vs. Dana Large Cap | Touchstone Large vs. Americafirst Large Cap |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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