Correlation Between Franklin Natural and City National
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and City National 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 City National 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 City National Rochdale, you can compare the effects of market volatilities on Franklin Natural and City National 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 City National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and City National.
Diversification Opportunities for Franklin Natural and City National
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and City is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and City National Rochdale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City National Rochdale 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 City National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City National Rochdale has no effect on the direction of Franklin Natural i.e., Franklin Natural and City National go up and down completely randomly.
Pair Corralation between Franklin Natural and City National
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 2.9 times more return on investment than City National. However, Franklin Natural is 2.9 times more volatile than City National Rochdale. It trades about 0.17 of its potential returns per unit of risk. City National Rochdale is currently generating about 0.17 per unit of risk. If you would invest 3,061 in Franklin Natural Resources on September 5, 2024 and sell it today you would earn a total of 92.00 from holding Franklin Natural Resources or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Natural Resources vs. City National Rochdale
Performance |
| Timeline |
| Franklin Natural Res |
| City National Rochdale |
Franklin Natural and City National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and City National
The main advantage of trading using opposite Franklin Natural and City National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, City National 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 City National will offset losses from the drop in City National's long position.| Franklin Natural vs. Bbh Intermediate Municipal | Franklin Natural vs. Materials Portfolio Fidelity | Franklin Natural vs. Rbb Fund | Franklin Natural vs. Falcon Focus Scv |
| City National vs. Franklin Natural Resources | City National vs. Energy Basic Materials | City National vs. World Energy Fund | City National vs. Goehring Rozencwajg Resources |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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