Correlation Between Franklin Templeton and NXG NextGen
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and NXG NextGen 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 Templeton and NXG NextGen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton Limited and NXG NextGen Infrastructure, you can compare the effects of market volatilities on Franklin Templeton and NXG NextGen 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 Templeton with a short position of NXG NextGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and NXG NextGen.
Diversification Opportunities for Franklin Templeton and NXG NextGen
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and NXG is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Limited and NXG NextGen Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXG NextGen Infrastr and Franklin Templeton 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 Templeton Limited are associated (or correlated) with NXG NextGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXG NextGen Infrastr has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and NXG NextGen go up and down completely randomly.
Pair Corralation between Franklin Templeton and NXG NextGen
Considering the 90-day investment horizon Franklin Templeton is expected to generate 2.4 times less return on investment than NXG NextGen. But when comparing it to its historical volatility, Franklin Templeton Limited is 2.5 times less risky than NXG NextGen. It trades about 0.11 of its potential returns per unit of risk. NXG NextGen Infrastructure is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,966 in NXG NextGen Infrastructure on August 31, 2024 and sell it today you would earn a total of 2,378 from holding NXG NextGen Infrastructure or generate 80.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Templeton Limited vs. NXG NextGen Infrastructure
Performance |
| Timeline |
| Franklin Templeton |
| NXG NextGen Infrastr |
Franklin Templeton and NXG NextGen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and NXG NextGen
The main advantage of trading using opposite Franklin Templeton and NXG NextGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, NXG NextGen 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 NXG NextGen will offset losses from the drop in NXG NextGen's long position.| Franklin Templeton vs. MFS Investment Grade | Franklin Templeton vs. Invesco High Income | Franklin Templeton vs. Eaton Vance National | Franklin Templeton vs. Rivernorth Opportunistic Municipalome |
| NXG NextGen vs. MFS Investment Grade | NXG NextGen vs. Invesco High Income | NXG NextGen vs. Eaton Vance National | NXG NextGen vs. Nuveen California Select |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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