Correlation Between Franklin Natural and Franklin Balance
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Franklin Balance 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 Franklin Balance 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 Franklin Balance Sheet, you can compare the effects of market volatilities on Franklin Natural and Franklin Balance 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 Franklin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Franklin Balance.
Diversification Opportunities for Franklin Natural and Franklin Balance
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FRANKLIN and Franklin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Franklin Balance Sheet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Balance Sheet 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 Franklin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Balance Sheet has no effect on the direction of Franklin Natural i.e., Franklin Natural and Franklin Balance go up and down completely randomly.
Pair Corralation between Franklin Natural and Franklin Balance
Assuming the 90 days horizon Franklin Natural is expected to generate 1.2 times less return on investment than Franklin Balance. But when comparing it to its historical volatility, Franklin Natural Resources is 1.26 times less risky than Franklin Balance. It trades about 0.23 of its potential returns per unit of risk. Franklin Balance Sheet is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,791 in Franklin Balance Sheet on August 25, 2024 and sell it today you would earn a total of 183.00 from holding Franklin Balance Sheet or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Franklin Balance Sheet
Performance |
| Timeline |
| Franklin Natural Res |
| Franklin Balance Sheet |
Franklin Natural and Franklin Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Franklin Balance
The main advantage of trading using opposite Franklin Natural and Franklin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Franklin Balance 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 Franklin Balance will offset losses from the drop in Franklin Balance's long position.| Franklin Natural vs. Dreyfus Institutional Reserves | Franklin Natural vs. Pioneer Money Market | Franklin Natural vs. Ubs Money Series | Franklin Natural vs. Massmutual Premier Funds |
| Franklin Balance vs. Franklin Mutual Beacon | Franklin Balance vs. Templeton Developing Markets | Franklin Balance vs. Franklin Mutual Global | Franklin Balance vs. Franklin Mutual Global |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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