Correlation Between Franklin Natural and Dreyfus Short
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Dreyfus Short 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 Short 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 Short Intermediate, you can compare the effects of market volatilities on Franklin Natural and Dreyfus Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Dreyfus Short.
Diversification Opportunities for Franklin Natural and Dreyfus Short
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Dreyfus is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Dreyfus Short Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Short Interm 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Short Interm has no effect on the direction of Franklin Natural i.e., Franklin Natural and Dreyfus Short go up and down completely randomly.
Pair Corralation between Franklin Natural and Dreyfus Short
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 12.81 times more return on investment than Dreyfus Short. However, Franklin Natural is 12.81 times more volatile than Dreyfus Short Intermediate. It trades about 0.05 of its potential returns per unit of risk. Dreyfus Short Intermediate is currently generating about 0.22 per unit of risk. If you would invest 2,823 in Franklin Natural Resources on September 1, 2024 and sell it today you would earn a total of 336.00 from holding Franklin Natural Resources or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Franklin Natural Resources vs. Dreyfus Short Intermediate
Performance |
| Timeline |
| Franklin Natural Res |
| Dreyfus Short Interm |
Franklin Natural and Dreyfus Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Dreyfus Short
The main advantage of trading using opposite Franklin Natural and Dreyfus Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Dreyfus Short 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 Short will offset losses from the drop in Dreyfus Short'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 |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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