Correlation Between Franklin Moderate and Aew Real
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate and Aew Real 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 Moderate and Aew Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Moderate Allocation and Aew Real Estate, you can compare the effects of market volatilities on Franklin Moderate and Aew Real 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 Moderate with a short position of Aew Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Aew Real.
Diversification Opportunities for Franklin Moderate and Aew Real
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Aew is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Aew Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aew Real Estate and Franklin Moderate 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 Moderate Allocation are associated (or correlated) with Aew Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aew Real Estate has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Aew Real go up and down completely randomly.
Pair Corralation between Franklin Moderate and Aew Real
Assuming the 90 days horizon Franklin Moderate is expected to generate 1.0 times less return on investment than Aew Real. But when comparing it to its historical volatility, Franklin Moderate Allocation is 1.87 times less risky than Aew Real. It trades about 0.11 of its potential returns per unit of risk. Aew Real Estate is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,107 in Aew Real Estate on September 2, 2024 and sell it today you would earn a total of 230.00 from holding Aew Real Estate or generate 20.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Aew Real Estate
Performance |
| Timeline |
| Franklin Moderate |
| Aew Real Estate |
Franklin Moderate and Aew Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Aew Real
The main advantage of trading using opposite Franklin Moderate and Aew Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate position performs unexpectedly, Aew Real 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 Aew Real will offset losses from the drop in Aew Real's long position.| Franklin Moderate vs. Jennison Natural Resources | Franklin Moderate vs. Oil Gas Ultrasector | Franklin Moderate vs. Clearbridge Energy Mlp | Franklin Moderate vs. Alpsalerian Energy Infrastructure |
| Aew Real vs. Dunham High Yield | Aew Real vs. Gmo High Yield | Aew Real vs. Valic Company I | Aew Real vs. Legg Mason Partners |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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