Correlation Between Franklin Financial and Mid Penn
Can any of the company-specific risk be diversified away by investing in both Franklin Financial and Mid Penn 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 Mid Penn 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 Mid Penn Bancorp, you can compare the effects of market volatilities on Franklin Financial and Mid Penn 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 Mid Penn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Financial and Mid Penn.
Diversification Opportunities for Franklin Financial and Mid Penn
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Mid is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Financial Services and Mid Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Penn Bancorp 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 Mid Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Penn Bancorp has no effect on the direction of Franklin Financial i.e., Franklin Financial and Mid Penn go up and down completely randomly.
Pair Corralation between Franklin Financial and Mid Penn
Given the investment horizon of 90 days Franklin Financial Services is expected to generate 0.7 times more return on investment than Mid Penn. However, Franklin Financial Services is 1.43 times less risky than Mid Penn. It trades about 0.03 of its potential returns per unit of risk. Mid Penn Bancorp is currently generating about 0.02 per unit of risk. If you would invest 2,836 in Franklin Financial Services on August 27, 2024 and sell it today you would earn a total of 523.00 from holding Franklin Financial Services or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Financial Services vs. Mid Penn Bancorp
Performance |
| Timeline |
| Franklin Financial |
| Mid Penn Bancorp |
Franklin Financial and Mid Penn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Financial and Mid Penn
The main advantage of trading using opposite Franklin Financial and Mid Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Financial position performs unexpectedly, Mid Penn 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 Mid Penn will offset losses from the drop in Mid Penn's long position.| Franklin Financial vs. Magyar Bancorp | Franklin Financial vs. Affinity Bancshares | Franklin Financial vs. Home Federal Bancorp | Franklin Financial vs. Sound Financial Bancorp |
| Mid Penn vs. Fifth Third Bancorp | Mid Penn vs. Zions Bancorporation | Mid Penn vs. Huntington Bancshares Incorporated | Mid Penn vs. PNC Financial Services |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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