Correlation Between Federated Global and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Federated Global and Franklin Utilities 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 Federated Global and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Global Allocation and Franklin Utilities Fund, you can compare the effects of market volatilities on Federated Global and Franklin Utilities 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 Federated Global with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Franklin Utilities.
Diversification Opportunities for Federated Global and Franklin Utilities
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEDERATED and Franklin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Federated Global 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 Federated Global Allocation are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Federated Global i.e., Federated Global and Franklin Utilities go up and down completely randomly.
Pair Corralation between Federated Global and Franklin Utilities
Assuming the 90 days horizon Federated Global is expected to generate 2.76 times less return on investment than Franklin Utilities. But when comparing it to its historical volatility, Federated Global Allocation is 1.61 times less risky than Franklin Utilities. It trades about 0.1 of its potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,184 in Franklin Utilities Fund on September 1, 2024 and sell it today you would earn a total of 443.00 from holding Franklin Utilities Fund or generate 20.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Federated Global Allocation vs. Franklin Utilities Fund
Performance |
| Timeline |
| Federated Global All |
| Franklin Utilities |
Federated Global and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Franklin Utilities
The main advantage of trading using opposite Federated Global and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Franklin Utilities 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 Franklin Utilities will offset losses from the drop in Franklin Utilities' long position.| Federated Global vs. Federated Max Cap Index | Federated Global vs. Federated Fund For | Federated Global vs. Aquagold International | Federated Global vs. Thrivent High Yield |
| Franklin Utilities vs. Wasatch Global Opportunities | Franklin Utilities vs. T Rowe Price | Franklin Utilities vs. Barings Global Floating | Franklin Utilities vs. Federated Global Allocation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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