Correlation Between Financials Ultrasector and Franklin International
Can any of the company-specific risk be diversified away by investing in both Financials Ultrasector and Franklin International 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 Financials Ultrasector and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financials Ultrasector Profund and Franklin International Growth, you can compare the effects of market volatilities on Financials Ultrasector and Franklin International 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 Financials Ultrasector with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Franklin International.
Diversification Opportunities for Financials Ultrasector and Franklin International
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Financials and Franklin is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Franklin International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Franklin International go up and down completely randomly.
Pair Corralation between Financials Ultrasector and Franklin International
Assuming the 90 days horizon Financials Ultrasector Profund is expected to generate 1.54 times more return on investment than Franklin International. However, Financials Ultrasector is 1.54 times more volatile than Franklin International Growth. It trades about 0.16 of its potential returns per unit of risk. Franklin International Growth is currently generating about 0.02 per unit of risk. If you would invest 3,447 in Financials Ultrasector Profund on August 29, 2024 and sell it today you would earn a total of 1,151 from holding Financials Ultrasector Profund or generate 33.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financials Ultrasector Profund vs. Franklin International Growth
Performance |
| Timeline |
| Financials Ultrasector |
| Franklin International |
Financials Ultrasector and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financials Ultrasector and Franklin International
The main advantage of trading using opposite Financials Ultrasector and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financials Ultrasector position performs unexpectedly, Franklin International 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 Franklin International will offset losses from the drop in Franklin International's long position.| Financials Ultrasector vs. Direxion Monthly Nasdaq 100 | Financials Ultrasector vs. HUMANA INC | Financials Ultrasector vs. Aquagold International | Financials Ultrasector vs. Barloworld Ltd ADR |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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