Correlation Between Franklin Natural and Adams Natural
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Adams 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 Adams 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 Adams Natural Resources, you can compare the effects of market volatilities on Franklin Natural and Adams 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 Adams Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Adams Natural.
Diversification Opportunities for Franklin Natural and Adams Natural
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Adams is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Adams Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams 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 Adams Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Natural Resources has no effect on the direction of Franklin Natural i.e., Franklin Natural and Adams Natural go up and down completely randomly.
Pair Corralation between Franklin Natural and Adams Natural
Assuming the 90 days horizon Franklin Natural is expected to generate 1.17 times less return on investment than Adams Natural. But when comparing it to its historical volatility, Franklin Natural Resources is 1.58 times less risky than Adams Natural. It trades about 0.96 of its potential returns per unit of risk. Adams Natural Resources is currently generating about 0.71 of returns per unit of risk over similar time horizon. If you would invest 2,123 in Adams Natural Resources on October 20, 2024 and sell it today you would earn a total of 263.00 from holding Adams Natural Resources or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Adams Natural Resources
Performance |
| Timeline |
| Franklin Natural Res |
| Adams Natural Resources |
Franklin Natural and Adams Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Adams Natural
The main advantage of trading using opposite Franklin Natural and Adams Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Adams 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 Adams Natural will offset losses from the drop in Adams Natural's long position.| Franklin Natural vs. Avantis Large Cap | Franklin Natural vs. Touchstone Large Cap | Franklin Natural vs. Vest Large Cap | Franklin Natural vs. Profunds Large Cap Growth |
| Adams Natural vs. Liberty All Star | Adams Natural vs. Tri Continental Closed | Adams Natural vs. Royce Value Closed | Adams Natural vs. Central Securities |
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 Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |