Correlation Between Franklin Natural and Quantitative
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Quantitative 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 Natural and Quantitative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Natural Resources and Quantitative U S, you can compare the effects of market volatilities on Franklin Natural and Quantitative 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 Natural with a short position of Quantitative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Quantitative.
Diversification Opportunities for Franklin Natural and Quantitative
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Quantitative is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Quantitative U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantitative U S and Franklin Natural 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 Natural Resources are associated (or correlated) with Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantitative U S has no effect on the direction of Franklin Natural i.e., Franklin Natural and Quantitative go up and down completely randomly.
Pair Corralation between Franklin Natural and Quantitative
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 0.94 times more return on investment than Quantitative. However, Franklin Natural Resources is 1.07 times less risky than Quantitative. It trades about 0.25 of its potential returns per unit of risk. Quantitative U S is currently generating about 0.2 per unit of risk. If you would invest 2,973 in Franklin Natural Resources on August 29, 2024 and sell it today you would earn a total of 140.00 from holding Franklin Natural Resources or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Quantitative U S
Performance |
| Timeline |
| Franklin Natural Res |
| Quantitative U S |
Franklin Natural and Quantitative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Quantitative
The main advantage of trading using opposite Franklin Natural and Quantitative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Quantitative 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 Quantitative will offset losses from the drop in Quantitative's long position.| Franklin Natural vs. Jp Morgan Smartretirement | Franklin Natural vs. Saat Moderate Strategy | Franklin Natural vs. Pgim Conservative Retirement | Franklin Natural vs. Fidelity Managed Retirement |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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