Correlation Between Franklin Natural and Dreyfus Natural
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Dreyfus Natural 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 Natural 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 Natural Resources, you can compare the effects of market volatilities on Franklin Natural and Dreyfus Natural 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 Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Dreyfus Natural.
Diversification Opportunities for Franklin Natural and Dreyfus Natural
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Dreyfus is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Dreyfus Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Natural Resources 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 Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Natural Resources has no effect on the direction of Franklin Natural i.e., Franklin Natural and Dreyfus Natural go up and down completely randomly.
Pair Corralation between Franklin Natural and Dreyfus Natural
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 0.86 times more return on investment than Dreyfus Natural. However, Franklin Natural Resources is 1.16 times less risky than Dreyfus Natural. It trades about 0.0 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about -0.02 per unit of risk. If you would invest 3,176 in Franklin Natural Resources on August 24, 2024 and sell it today you would lose (26.00) from holding Franklin Natural Resources or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Dreyfus Natural Resources
Performance |
| Timeline |
| Franklin Natural Res |
| Dreyfus Natural Resources |
Franklin Natural and Dreyfus Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Dreyfus Natural
The main advantage of trading using opposite Franklin Natural and Dreyfus Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Dreyfus Natural 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 Natural will offset losses from the drop in Dreyfus Natural's long position.| Franklin Natural vs. Pgim Jennison Technology | Franklin Natural vs. Invesco Technology Fund | Franklin Natural vs. Columbia Global Technology | Franklin Natural vs. Hennessy Technology Fund |
| Dreyfus Natural vs. The Equity Growth | Dreyfus Natural vs. Growth Income Fund | Dreyfus Natural vs. T Rowe Price | Dreyfus Natural vs. Pace Smallmedium Growth |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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