Correlation Between Franklin Strategic and Knife River
Can any of the company-specific risk be diversified away by investing in both Franklin Strategic and Knife River 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 Strategic and Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Strategic Mortgage and Knife River, you can compare the effects of market volatilities on Franklin Strategic and Knife River 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 Strategic with a short position of Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Strategic and Knife River.
Diversification Opportunities for Franklin Strategic and Knife River
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Knife is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Strategic Mortgage and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and Franklin Strategic 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 Strategic Mortgage are associated (or correlated) with Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Franklin Strategic i.e., Franklin Strategic and Knife River go up and down completely randomly.
Pair Corralation between Franklin Strategic and Knife River
Assuming the 90 days horizon Franklin Strategic Mortgage is expected to under-perform the Knife River. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Strategic Mortgage is 7.53 times less risky than Knife River. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Knife River is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,345 in Knife River on October 25, 2024 and sell it today you would earn a total of 1,022 from holding Knife River or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Strategic Mortgage vs. Knife River
Performance |
| Timeline |
| Franklin Strategic |
| Knife River |
Franklin Strategic and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Strategic and Knife River
The main advantage of trading using opposite Franklin Strategic and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Strategic position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River's long position.| Franklin Strategic vs. Ultraemerging Markets Profund | Franklin Strategic vs. Alphacentric Hedged Market | Franklin Strategic vs. Locorr Market Trend | Franklin Strategic vs. Franklin Emerging Market |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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