Correlation Between Franklin Natural and Dreyfus Diversified
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Dreyfus Diversified 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 Dreyfus Diversified 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 Dreyfus Diversified International, you can compare the effects of market volatilities on Franklin Natural and Dreyfus Diversified 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 Dreyfus Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Dreyfus Diversified.
Diversification Opportunities for Franklin Natural and Dreyfus Diversified
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Dreyfus is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Dreyfus Diversified Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Diversified 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 Dreyfus Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Diversified has no effect on the direction of Franklin Natural i.e., Franklin Natural and Dreyfus Diversified go up and down completely randomly.
Pair Corralation between Franklin Natural and Dreyfus Diversified
Assuming the 90 days horizon Franklin Natural is expected to generate 1.54 times less return on investment than Dreyfus Diversified. In addition to that, Franklin Natural is 1.54 times more volatile than Dreyfus Diversified International. It trades about 0.03 of its total potential returns per unit of risk. Dreyfus Diversified International is currently generating about 0.07 per unit of volatility. If you would invest 829.00 in Dreyfus Diversified International on September 4, 2024 and sell it today you would earn a total of 182.00 from holding Dreyfus Diversified International or generate 21.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 83.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Dreyfus Diversified Internatio
Performance |
| Timeline |
| Franklin Natural Res |
| Dreyfus Diversified |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franklin Natural and Dreyfus Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Dreyfus Diversified
The main advantage of trading using opposite Franklin Natural and Dreyfus Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Dreyfus Diversified 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 Dreyfus Diversified will offset losses from the drop in Dreyfus Diversified's long position.| Franklin Natural vs. Qs Large Cap | Franklin Natural vs. Western Asset Municipal | Franklin Natural vs. T Rowe Price | Franklin Natural vs. Arrow Managed Futures |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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