Correlation Between Franklin Natural and Jpmorgan Hedged
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Jpmorgan Hedged 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 Jpmorgan Hedged 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 Jpmorgan Hedged Equity, you can compare the effects of market volatilities on Franklin Natural and Jpmorgan Hedged 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 Jpmorgan Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Jpmorgan Hedged.
Diversification Opportunities for Franklin Natural and Jpmorgan Hedged
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Jpmorgan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Jpmorgan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Hedged Equity 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 Jpmorgan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Hedged Equity has no effect on the direction of Franklin Natural i.e., Franklin Natural and Jpmorgan Hedged go up and down completely randomly.
Pair Corralation between Franklin Natural and Jpmorgan Hedged
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 1.93 times more return on investment than Jpmorgan Hedged. However, Franklin Natural is 1.93 times more volatile than Jpmorgan Hedged Equity. It trades about 0.22 of its potential returns per unit of risk. Jpmorgan Hedged Equity is currently generating about 0.37 per unit of risk. If you would invest 3,041 in Franklin Natural Resources on September 1, 2024 and sell it today you would earn a total of 118.00 from holding Franklin Natural Resources or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Natural Resources vs. Jpmorgan Hedged Equity
Performance |
| Timeline |
| Franklin Natural Res |
| Jpmorgan Hedged Equity |
Franklin Natural and Jpmorgan Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Jpmorgan Hedged
The main advantage of trading using opposite Franklin Natural and Jpmorgan Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Jpmorgan Hedged 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 Jpmorgan Hedged will offset losses from the drop in Jpmorgan Hedged'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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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