Correlation Between Franklin Financial and Luther Burbank
Can any of the company-specific risk be diversified away by investing in both Franklin Financial and Luther Burbank 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 Financial and Luther Burbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Financial Services and Luther Burbank, you can compare the effects of market volatilities on Franklin Financial and Luther Burbank 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 Financial with a short position of Luther Burbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Financial and Luther Burbank.
Diversification Opportunities for Franklin Financial and Luther Burbank
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Luther is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Financial Services and Luther Burbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luther Burbank and Franklin Financial 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 Financial Services are associated (or correlated) with Luther Burbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luther Burbank has no effect on the direction of Franklin Financial i.e., Franklin Financial and Luther Burbank go up and down completely randomly.
Pair Corralation between Franklin Financial and Luther Burbank
Given the investment horizon of 90 days Franklin Financial Services is expected to generate 0.63 times more return on investment than Luther Burbank. However, Franklin Financial Services is 1.59 times less risky than Luther Burbank. It trades about 0.03 of its potential returns per unit of risk. Luther Burbank is currently generating about -0.03 per unit of risk. If you would invest 2,738 in Franklin Financial Services on September 3, 2024 and sell it today you would earn a total of 624.00 from holding Franklin Financial Services or generate 22.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 30.91% |
| Values | Daily Returns |
Franklin Financial Services vs. Luther Burbank
Performance |
| Timeline |
| Franklin Financial |
| Luther Burbank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franklin Financial and Luther Burbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Financial and Luther Burbank
The main advantage of trading using opposite Franklin Financial and Luther Burbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Financial position performs unexpectedly, Luther Burbank 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 Luther Burbank will offset losses from the drop in Luther Burbank's long position.| Franklin Financial vs. JPMorgan Chase Co | Franklin Financial vs. Citigroup | Franklin Financial vs. Wells Fargo | Franklin Financial vs. Toronto Dominion Bank |
| Luther Burbank vs. First Community | Luther Burbank vs. Community West Bancshares | Luther Burbank vs. First Financial Northwest | Luther Burbank vs. First Northwest Bancorp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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