Correlation Between Franklin New and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Franklin New and Sterling Capital 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 New and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin New York and Sterling Capital Short, you can compare the effects of market volatilities on Franklin New and Sterling Capital 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 New with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin New and Sterling Capital.
Diversification Opportunities for Franklin New and Sterling Capital
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and STERLING is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Franklin New York and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and Franklin New 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 New York are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Short has no effect on the direction of Franklin New i.e., Franklin New and Sterling Capital go up and down completely randomly.
Pair Corralation between Franklin New and Sterling Capital
Assuming the 90 days horizon Franklin New York is expected to generate 2.02 times more return on investment than Sterling Capital. However, Franklin New is 2.02 times more volatile than Sterling Capital Short. It trades about 0.09 of its potential returns per unit of risk. Sterling Capital Short is currently generating about 0.17 per unit of risk. If you would invest 934.00 in Franklin New York on August 29, 2024 and sell it today you would earn a total of 76.00 from holding Franklin New York or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin New York vs. Sterling Capital Short
Performance |
| Timeline |
| Franklin New York |
| Sterling Capital Short |
Franklin New and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin New and Sterling Capital
The main advantage of trading using opposite Franklin New and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin New position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Franklin New vs. Sterling Capital Short | Franklin New vs. Ab Select Longshort | Franklin New vs. Barings Active Short | Franklin New vs. Touchstone Ultra Short |
| Sterling Capital vs. Permanent Portfolio Class | Sterling Capital vs. HUMANA INC | Sterling Capital vs. Aquagold International | Sterling Capital 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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