Correlation Between Franklin Federal and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Sterling Capital 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 Federal and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Sterling Capital Short, you can compare the effects of market volatilities on Franklin Federal and Sterling Capital 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 Federal with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Sterling Capital.
Diversification Opportunities for Franklin Federal and Sterling Capital
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Sterling is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Short has no effect on the direction of Franklin Federal i.e., Franklin Federal and Sterling Capital go up and down completely randomly.
Pair Corralation between Franklin Federal and Sterling Capital
Assuming the 90 days horizon Franklin Federal is expected to generate 1.07 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Franklin Federal Limited Term is 1.37 times less risky than Sterling Capital. It trades about 0.23 of its potential returns per unit of risk. Sterling Capital Short is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 781.00 in Sterling Capital Short on September 1, 2024 and sell it today you would earn a total of 55.00 from holding Sterling Capital Short or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Sterling Capital Short
Performance |
| Timeline |
| Franklin Federal Lim |
| Sterling Capital Short |
Franklin Federal and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Sterling Capital
The main advantage of trading using opposite Franklin Federal and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Franklin Federal vs. Small Midcap Dividend Income | Franklin Federal vs. Tax Managed Mid Small | Franklin Federal vs. Touchstone Small Cap | Franklin Federal vs. Jpmorgan Small Cap |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital South | Sterling Capital vs. Sterling Capital South |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |