Correlation Between Franklin Natural and Sierra Tactical
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Sierra Tactical 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 Sierra Tactical 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 Sierra Tactical Risk, you can compare the effects of market volatilities on Franklin Natural and Sierra Tactical 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 Sierra Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Sierra Tactical.
Diversification Opportunities for Franklin Natural and Sierra Tactical
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Sierra is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Sierra Tactical Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Risk 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 Sierra Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Risk has no effect on the direction of Franklin Natural i.e., Franklin Natural and Sierra Tactical go up and down completely randomly.
Pair Corralation between Franklin Natural and Sierra Tactical
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 2.86 times more return on investment than Sierra Tactical. However, Franklin Natural is 2.86 times more volatile than Sierra Tactical Risk. It trades about 0.03 of its potential returns per unit of risk. Sierra Tactical Risk is currently generating about 0.08 per unit of risk. If you would invest 2,651 in Franklin Natural Resources on August 30, 2024 and sell it today you would earn a total of 408.00 from holding Franklin Natural Resources or generate 15.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Sierra Tactical Risk
Performance |
| Timeline |
| Franklin Natural Res |
| Sierra Tactical Risk |
Franklin Natural and Sierra Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Sierra Tactical
The main advantage of trading using opposite Franklin Natural and Sierra Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Sierra Tactical 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 Sierra Tactical will offset losses from the drop in Sierra Tactical's long position.| Franklin Natural vs. Ab Select Longshort | Franklin Natural vs. Federated Short Intermediate Duration | Franklin Natural vs. T Rowe Price | Franklin Natural vs. Astor Longshort Fund |
| Sierra Tactical vs. Virtus Convertible | Sierra Tactical vs. Allianzgi Convertible Income | Sierra Tactical vs. Gabelli Convertible And | Sierra Tactical vs. Fidelity Sai Convertible |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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