Correlation Between Franklin Natural and Jennison Natural
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Jennison 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 Jennison 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 Jennison Natural Resources, you can compare the effects of market volatilities on Franklin Natural and Jennison 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 Jennison Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Jennison Natural.
Diversification Opportunities for Franklin Natural and Jennison Natural
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Jennison is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Jennison Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jennison Natural Res 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 Jennison Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jennison Natural Res has no effect on the direction of Franklin Natural i.e., Franklin Natural and Jennison Natural go up and down completely randomly.
Pair Corralation between Franklin Natural and Jennison Natural
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 0.89 times more return on investment than Jennison Natural. However, Franklin Natural Resources is 1.12 times less risky than Jennison Natural. It trades about 0.01 of its potential returns per unit of risk. Jennison Natural Resources is currently generating about 0.0 per unit of risk. If you would invest 2,671 in Franklin Natural Resources on January 18, 2025 and sell it today you would earn a total of 93.00 from holding Franklin Natural Resources or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Jennison Natural Resources
Performance |
| Timeline |
| Franklin Natural Res |
| Jennison Natural Res |
Franklin Natural and Jennison Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Jennison Natural
The main advantage of trading using opposite Franklin Natural and Jennison Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Jennison 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 Jennison Natural will offset losses from the drop in Jennison Natural's long position.| Franklin Natural vs. Ab Global Bond | Franklin Natural vs. Legg Mason Global | Franklin Natural vs. Nuveen Global Real | Franklin Natural vs. Ab Global Real |
| Jennison Natural vs. Gold And Precious | Jennison Natural vs. Franklin Gold Precious | Jennison Natural vs. Invesco Gold Special | Jennison Natural vs. Short Precious Metals |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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