Correlation Between Franklin Government and Alger Global
Can any of the company-specific risk be diversified away by investing in both Franklin Government and Alger Global 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 Global 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 Global Growth, you can compare the effects of market volatilities on Franklin Government and Alger Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Alger Global.
Diversification Opportunities for Franklin Government and Alger Global
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Alger is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Alger Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Global 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Global Growth has no effect on the direction of Franklin Government i.e., Franklin Government and Alger Global go up and down completely randomly.
Pair Corralation between Franklin Government and Alger Global
Assuming the 90 days horizon Franklin Government is expected to generate 5.03 times less return on investment than Alger Global. But when comparing it to its historical volatility, Franklin Government Money is 7.91 times less risky than Alger Global. It trades about 0.13 of its potential returns per unit of risk. Alger Global Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,757 in Alger Global Growth on September 5, 2024 and sell it today you would earn a total of 280.00 from holding Alger Global Growth or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Franklin Government Money vs. Alger Global Growth
Performance |
| Timeline |
| Franklin Government Money |
| Alger Global Growth |
Franklin Government and Alger Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Government and Alger Global
The main advantage of trading using opposite Franklin Government and Alger Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, Alger Global 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 Global will offset losses from the drop in Alger Global's long position.| Franklin Government vs. World Energy Fund | Franklin Government vs. Clearbridge Energy Mlp | Franklin Government vs. Franklin Natural Resources | Franklin Government vs. Energy Basic Materials |
| Alger Global vs. Alger Midcap Growth | Alger Global vs. Alger Midcap Growth | Alger Global vs. Alger Mid Cap | Alger Global vs. Alger Small Cap |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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