Correlation Between Franklin Natural and Profunds-large Cap
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Profunds-large Cap 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 Profunds-large Cap 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 Profunds Large Cap Growth, you can compare the effects of market volatilities on Franklin Natural and Profunds-large Cap 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 Profunds-large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Profunds-large Cap.
Diversification Opportunities for Franklin Natural and Profunds-large Cap
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Profunds-large is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Profunds Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Large Cap 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 Profunds-large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profunds Large Cap has no effect on the direction of Franklin Natural i.e., Franklin Natural and Profunds-large Cap go up and down completely randomly.
Pair Corralation between Franklin Natural and Profunds-large Cap
Assuming the 90 days horizon Franklin Natural is expected to generate 4.41 times less return on investment than Profunds-large Cap. But when comparing it to its historical volatility, Franklin Natural Resources is 1.13 times less risky than Profunds-large Cap. It trades about 0.02 of its potential returns per unit of risk. Profunds Large Cap Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,030 in Profunds Large Cap Growth on August 28, 2024 and sell it today you would earn a total of 430.00 from holding Profunds Large Cap Growth or generate 14.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Franklin Natural Resources vs. Profunds Large Cap Growth
Performance |
| Timeline |
| Franklin Natural Res |
| Profunds Large Cap |
Franklin Natural and Profunds-large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Profunds-large Cap
The main advantage of trading using opposite Franklin Natural and Profunds-large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Profunds-large Cap 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 Profunds-large Cap will offset losses from the drop in Profunds-large Cap'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 |
| Profunds-large Cap vs. Franklin Natural Resources | Profunds-large Cap vs. Hennessy Bp Energy | Profunds-large Cap vs. Alpsalerian Energy Infrastructure | Profunds-large Cap vs. Firsthand Alternative Energy |
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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