Correlation Between Franklin Natural and American Century
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and American Century 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 American Century 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 American Century One, you can compare the effects of market volatilities on Franklin Natural and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and American Century.
Diversification Opportunities for Franklin Natural and American Century
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and American Century One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century One 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century One has no effect on the direction of Franklin Natural i.e., Franklin Natural and American Century go up and down completely randomly.
Pair Corralation between Franklin Natural and American Century
Assuming the 90 days horizon Franklin Natural is expected to generate 2.19 times less return on investment than American Century. In addition to that, Franklin Natural is 1.54 times more volatile than American Century One. It trades about 0.05 of its total potential returns per unit of risk. American Century One is currently generating about 0.15 per unit of volatility. If you would invest 888.00 in American Century One on September 1, 2024 and sell it today you would earn a total of 278.00 from holding American Century One or generate 31.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. American Century One
Performance |
| Timeline |
| Franklin Natural Res |
| American Century One |
Franklin Natural and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and American Century
The main advantage of trading using opposite Franklin Natural and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Franklin Natural vs. Lord Abbett Small | Franklin Natural vs. Great West Loomis Sayles | Franklin Natural vs. Amg River Road | Franklin Natural vs. Heartland Value Plus |
| American Century vs. Jpmorgan Trust I | American Century vs. Pimco Funds | American Century vs. Franklin Government Money | American Century vs. T Rowe Price |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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