Correlation Between Franklin Natural and Aggressive Growth
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Aggressive Growth 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 Aggressive Growth 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 Aggressive Growth Portfolio, you can compare the effects of market volatilities on Franklin Natural and Aggressive Growth 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 Aggressive Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Aggressive Growth.
Diversification Opportunities for Franklin Natural and Aggressive Growth
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Aggressive is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Aggressive Growth Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Growth 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 Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Franklin Natural i.e., Franklin Natural and Aggressive Growth go up and down completely randomly.
Pair Corralation between Franklin Natural and Aggressive Growth
Assuming the 90 days horizon Franklin Natural is expected to generate 3.02 times less return on investment than Aggressive Growth. But when comparing it to its historical volatility, Franklin Natural Resources is 1.25 times less risky than Aggressive Growth. It trades about 0.17 of its potential returns per unit of risk. Aggressive Growth Portfolio is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 10,106 in Aggressive Growth Portfolio on September 5, 2024 and sell it today you would earn a total of 1,002 from holding Aggressive Growth Portfolio or generate 9.91% 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. Aggressive Growth Portfolio
Performance |
| Timeline |
| Franklin Natural Res |
| Aggressive Growth |
Franklin Natural and Aggressive Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Aggressive Growth
The main advantage of trading using opposite Franklin Natural and Aggressive Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Aggressive Growth 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 Aggressive Growth will offset losses from the drop in Aggressive Growth's long position.| Franklin Natural vs. Bbh Intermediate Municipal | Franklin Natural vs. Materials Portfolio Fidelity | Franklin Natural vs. Rbb Fund | Franklin Natural vs. Falcon Focus Scv |
| Aggressive Growth vs. Calvert Global Energy | Aggressive Growth vs. Invesco Energy Fund | Aggressive Growth vs. Gamco Natural Resources | Aggressive Growth vs. Franklin Natural Resources |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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