Correlation Between Franklin Natural and Intech Managed
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Intech Managed 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 Intech Managed 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 Intech Managed Volatility, you can compare the effects of market volatilities on Franklin Natural and Intech Managed 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 Intech Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Intech Managed.
Diversification Opportunities for Franklin Natural and Intech Managed
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Intech is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Intech Managed Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intech Managed Volatility 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 Intech Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intech Managed Volatility has no effect on the direction of Franklin Natural i.e., Franklin Natural and Intech Managed go up and down completely randomly.
Pair Corralation between Franklin Natural and Intech Managed
Assuming the 90 days horizon Franklin Natural is expected to generate 1.74 times less return on investment than Intech Managed. In addition to that, Franklin Natural is 1.44 times more volatile than Intech Managed Volatility. It trades about 0.05 of its total potential returns per unit of risk. Intech Managed Volatility is currently generating about 0.13 per unit of volatility. If you would invest 974.00 in Intech Managed Volatility on August 29, 2024 and sell it today you would earn a total of 249.00 from holding Intech Managed Volatility or generate 25.56% 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. Intech Managed Volatility
Performance |
| Timeline |
| Franklin Natural Res |
| Intech Managed Volatility |
Franklin Natural and Intech Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Intech Managed
The main advantage of trading using opposite Franklin Natural and Intech Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Intech Managed 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 Intech Managed will offset losses from the drop in Intech Managed'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 |
| Intech Managed vs. Tortoise Energy Independence | Intech Managed vs. Short Oil Gas | Intech Managed vs. Franklin Natural Resources | Intech Managed vs. Oil Gas Ultrasector |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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