Correlation Between Franklin Government and Alger Midcap
Can any of the company-specific risk be diversified away by investing in both Franklin Government and Alger Midcap 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 Government and Alger Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Government Money and Alger Midcap Growth, you can compare the effects of market volatilities on Franklin Government and Alger Midcap 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 Government with a short position of Alger Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Alger Midcap.
Diversification Opportunities for Franklin Government and Alger Midcap
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Alger is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Alger Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Midcap Growth and Franklin Government 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 Government Money are associated (or correlated) with Alger Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Midcap Growth has no effect on the direction of Franklin Government i.e., Franklin Government and Alger Midcap go up and down completely randomly.
Pair Corralation between Franklin Government and Alger Midcap
If you would invest 1,471 in Alger Midcap Growth on September 3, 2024 and sell it today you would earn a total of 173.00 from holding Alger Midcap Growth or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Alger Midcap Growth
Performance |
| Timeline |
| Franklin Government Money |
| Alger Midcap Growth |
Franklin Government and Alger Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Government and Alger Midcap
The main advantage of trading using opposite Franklin Government and Alger Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, Alger Midcap 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 Alger Midcap will offset losses from the drop in Alger Midcap's long position.| Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard 500 Index | Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard Total Stock |
| Alger Midcap vs. Calvert Short Duration | Alger Midcap vs. Touchstone Ultra Short | Alger Midcap vs. Jhancock Short Duration | Alger Midcap vs. Quantitative Longshort Equity |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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