Correlation Between Franklin Natural and Federated Capital
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Federated 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 Natural and Federated Capital 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 Federated Capital Income, you can compare the effects of market volatilities on Franklin Natural and Federated 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 Natural with a short position of Federated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Federated Capital.
Diversification Opportunities for Franklin Natural and Federated Capital
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Federated is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Federated Capital Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Capital Income 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 Federated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Capital Income has no effect on the direction of Franklin Natural i.e., Franklin Natural and Federated Capital go up and down completely randomly.
Pair Corralation between Franklin Natural and Federated Capital
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 3.0 times more return on investment than Federated Capital. However, Franklin Natural is 3.0 times more volatile than Federated Capital Income. It trades about 0.07 of its potential returns per unit of risk. Federated Capital Income is currently generating about 0.15 per unit of risk. If you would invest 2,938 in Franklin Natural Resources on September 12, 2024 and sell it today you would earn a total of 115.00 from holding Franklin Natural Resources or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Federated Capital Income
Performance |
| Timeline |
| Franklin Natural Res |
| Federated Capital Income |
Franklin Natural and Federated Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Federated Capital
The main advantage of trading using opposite Franklin Natural and Federated Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Federated 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 Federated Capital will offset losses from the drop in Federated Capital's long position.| Franklin Natural vs. Vanguard Financials Index | Franklin Natural vs. Prudential Jennison Financial | Franklin Natural vs. John Hancock Financial | Franklin Natural vs. Mesirow Financial Small |
| Federated Capital vs. Prudential Jennison Financial | Federated Capital vs. 1919 Financial Services | Federated Capital vs. Angel Oak Financial | Federated Capital vs. Blackrock Financial Institutions |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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