Correlation Between Franklin Natural and Timothy Aggressive
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Timothy Aggressive 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 Timothy Aggressive 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 Timothy Aggressive Growth, you can compare the effects of market volatilities on Franklin Natural and Timothy Aggressive 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 Timothy Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Timothy Aggressive.
Diversification Opportunities for Franklin Natural and Timothy Aggressive
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Timothy is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Timothy Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy 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 Timothy Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Aggressive Growth has no effect on the direction of Franklin Natural i.e., Franklin Natural and Timothy Aggressive go up and down completely randomly.
Pair Corralation between Franklin Natural and Timothy Aggressive
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 0.75 times more return on investment than Timothy Aggressive. However, Franklin Natural Resources is 1.33 times less risky than Timothy Aggressive. It trades about 0.07 of its potential returns per unit of risk. Timothy Aggressive Growth is currently generating about 0.03 per unit of risk. If you would invest 2,938 in Franklin Natural Resources on September 12, 2024 and sell it today you would earn a total of 115.00 from holding Franklin Natural Resources or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Franklin Natural Resources vs. Timothy Aggressive Growth
Performance |
| Timeline |
| Franklin Natural Res |
| Timothy Aggressive Growth |
Franklin Natural and Timothy Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Timothy Aggressive
The main advantage of trading using opposite Franklin Natural and Timothy Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Timothy Aggressive 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 Timothy Aggressive will offset losses from the drop in Timothy Aggressive's long position.| Franklin Natural vs. Vanguard Financials Index | Franklin Natural vs. Prudential Jennison Financial | Franklin Natural vs. John Hancock Financial | Franklin Natural vs. Mesirow Financial Small |
| Timothy Aggressive vs. Lgm Risk Managed | Timothy Aggressive vs. Intal High Relative | Timothy Aggressive vs. Alliancebernstein Global High | Timothy Aggressive vs. Siit High Yield |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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