Correlation Between Franklin Natural and Touchstone Premium
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Touchstone Premium 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 Touchstone Premium 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 Touchstone Premium Yield, you can compare the effects of market volatilities on Franklin Natural and Touchstone Premium 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 Touchstone Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Touchstone Premium.
Diversification Opportunities for Franklin Natural and Touchstone Premium
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Touchstone is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Touchstone Premium Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Premium Yield 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 Touchstone Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Premium Yield has no effect on the direction of Franklin Natural i.e., Franklin Natural and Touchstone Premium go up and down completely randomly.
Pair Corralation between Franklin Natural and Touchstone Premium
Assuming the 90 days horizon Franklin Natural Resources is expected to under-perform the Touchstone Premium. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Natural Resources is 1.98 times less risky than Touchstone Premium. The mutual fund trades about -0.37 of its potential returns per unit of risk. The Touchstone Premium Yield is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 869.00 in Touchstone Premium Yield on September 20, 2024 and sell it today you would lose (36.00) from holding Touchstone Premium Yield or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Touchstone Premium Yield
Performance |
| Timeline |
| Franklin Natural Res |
| Touchstone Premium Yield |
Franklin Natural and Touchstone Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Touchstone Premium
The main advantage of trading using opposite Franklin Natural and Touchstone Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Touchstone Premium 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 Touchstone Premium will offset losses from the drop in Touchstone Premium's long position.| Franklin Natural vs. Siit Ultra Short | Franklin Natural vs. Barings Active Short | Franklin Natural vs. Astor Longshort Fund | Franklin Natural vs. Dreyfus Short Intermediate |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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