Correlation Between Franklin Utilities and Nationwide Global
Can any of the company-specific risk be diversified away by investing in both Franklin Utilities and Nationwide 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 Utilities and Nationwide Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Utilities Fund and Nationwide Global Equity, you can compare the effects of market volatilities on Franklin Utilities and Nationwide 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 Utilities with a short position of Nationwide Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Utilities and Nationwide Global.
Diversification Opportunities for Franklin Utilities and Nationwide Global
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Nationwide is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Utilities Fund and Nationwide Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Global Equity and Franklin Utilities 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 Utilities Fund are associated (or correlated) with Nationwide Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Global Equity has no effect on the direction of Franklin Utilities i.e., Franklin Utilities and Nationwide Global go up and down completely randomly.
Pair Corralation between Franklin Utilities and Nationwide Global
Assuming the 90 days horizon Franklin Utilities Fund is expected to generate 0.88 times more return on investment than Nationwide Global. However, Franklin Utilities Fund is 1.14 times less risky than Nationwide Global. It trades about -0.01 of its potential returns per unit of risk. Nationwide Global Equity is currently generating about -0.27 per unit of risk. If you would invest 2,239 in Franklin Utilities Fund on January 10, 2025 and sell it today you would lose (15.00) from holding Franklin Utilities Fund or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Franklin Utilities Fund vs. Nationwide Global Equity
Performance |
| Timeline |
| Franklin Utilities |
| Nationwide Global Equity |
Franklin Utilities and Nationwide Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Utilities and Nationwide Global
The main advantage of trading using opposite Franklin Utilities and Nationwide Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Utilities position performs unexpectedly, Nationwide 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 Nationwide Global will offset losses from the drop in Nationwide Global's long position.| Franklin Utilities vs. Dominion Energy | Franklin Utilities vs. Consolidated Edison | Franklin Utilities vs. Eversource Energy | Franklin Utilities vs. FirstEnergy |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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