Correlation Between Franklin Natural and Barings Active
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Barings Active 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 Barings Active 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 Barings Active Short, you can compare the effects of market volatilities on Franklin Natural and Barings Active 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 Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Barings Active.
Diversification Opportunities for Franklin Natural and Barings Active
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Barings is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short 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 Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Franklin Natural i.e., Franklin Natural and Barings Active go up and down completely randomly.
Pair Corralation between Franklin Natural and Barings Active
Assuming the 90 days horizon Franklin Natural is expected to generate 2.68 times less return on investment than Barings Active. In addition to that, Franklin Natural is 9.06 times more volatile than Barings Active Short. It trades about 0.01 of its total potential returns per unit of risk. Barings Active Short is currently generating about 0.16 per unit of volatility. If you would invest 911.00 in Barings Active Short on December 7, 2024 and sell it today you would earn a total of 20.00 from holding Barings Active Short or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Franklin Natural Resources vs. Barings Active Short
Performance |
| Timeline |
| Franklin Natural Res |
| Barings Active Short |
Franklin Natural and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Barings Active
The main advantage of trading using opposite Franklin Natural and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Barings Active 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 Barings Active will offset losses from the drop in Barings Active's long position.| Franklin Natural vs. T Rowe Price | Franklin Natural vs. Tiaa Cref Large Cap Value | Franklin Natural vs. Touchstone Large Cap | Franklin Natural vs. Profunds Large Cap Growth |
| Barings Active vs. Transamerica High Yield | Barings Active vs. Ab High Income | Barings Active vs. Rivernorthoaktree High Income | Barings Active vs. Intal High Relative |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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