Correlation Between Franklin Natural and Sit Mutual
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Sit Mutual 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 Sit Mutual 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 Sit Mutual Funds, you can compare the effects of market volatilities on Franklin Natural and Sit Mutual 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 Sit Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Sit Mutual.
Diversification Opportunities for Franklin Natural and Sit Mutual
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Sit is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Sit Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Mutual Funds 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 Sit Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Mutual Funds has no effect on the direction of Franklin Natural i.e., Franklin Natural and Sit Mutual go up and down completely randomly.
Pair Corralation between Franklin Natural and Sit Mutual
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 6.09 times more return on investment than Sit Mutual. However, Franklin Natural is 6.09 times more volatile than Sit Mutual Funds. It trades about 0.03 of its potential returns per unit of risk. Sit Mutual Funds is currently generating about 0.07 per unit of risk. If you would invest 2,698 in Franklin Natural Resources on August 30, 2024 and sell it today you would earn a total of 480.00 from holding Franklin Natural Resources or generate 17.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Sit Mutual Funds
Performance |
| Timeline |
| Franklin Natural Res |
| Sit Mutual Funds |
Franklin Natural and Sit Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Sit Mutual
The main advantage of trading using opposite Franklin Natural and Sit Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Sit Mutual 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 Sit Mutual will offset losses from the drop in Sit Mutual's long position.The idea behind Franklin Natural Resources and Sit Mutual Funds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sit Mutual vs. Kinetics Market Opportunities | Sit Mutual vs. Versatile Bond Portfolio | Sit Mutual vs. Barings Active Short | Sit Mutual vs. Bbh Intermediate Municipal |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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