Correlation Between Franklin Natural and Prudential Short
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Prudential Short 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 Prudential Short 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 Prudential Short Term Porate, you can compare the effects of market volatilities on Franklin Natural and Prudential Short 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 Prudential Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Prudential Short.
Diversification Opportunities for Franklin Natural and Prudential Short
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Prudential is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Prudential Short Term Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Term 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 Prudential Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Term has no effect on the direction of Franklin Natural i.e., Franklin Natural and Prudential Short go up and down completely randomly.
Pair Corralation between Franklin Natural and Prudential Short
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 6.15 times more return on investment than Prudential Short. However, Franklin Natural is 6.15 times more volatile than Prudential Short Term Porate. It trades about 0.04 of its potential returns per unit of risk. Prudential Short Term Porate is currently generating about 0.17 per unit of risk. If you would invest 2,801 in Franklin Natural Resources on September 14, 2024 and sell it today you would earn a total of 275.00 from holding Franklin Natural Resources or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Prudential Short Term Porate
Performance |
| Timeline |
| Franklin Natural Res |
| Prudential Short Term |
Franklin Natural and Prudential Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Prudential Short
The main advantage of trading using opposite Franklin Natural and Prudential Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Prudential Short 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 Prudential Short will offset losses from the drop in Prudential Short's long position.| Franklin Natural vs. Small Pany Growth | Franklin Natural vs. Cardinal Small Cap | Franklin Natural vs. Franklin Small Cap | Franklin Natural vs. Vy Columbia Small |
| Prudential Short vs. Goehring Rozencwajg Resources | Prudential Short vs. Gamco Natural Resources | Prudential Short vs. Franklin Natural Resources | Prudential Short vs. Jennison 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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