Correlation Between Franklin Federal and Hotchkis Wiley
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Hotchkis Wiley 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 Hotchkis Wiley 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 Hotchkis Wiley Small, you can compare the effects of market volatilities on Franklin Federal and Hotchkis Wiley 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 Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Hotchkis Wiley.
Diversification Opportunities for Franklin Federal and Hotchkis Wiley
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Hotchkis is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Hotchkis Wiley Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Small 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 Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Small has no effect on the direction of Franklin Federal i.e., Franklin Federal and Hotchkis Wiley go up and down completely randomly.
Pair Corralation between Franklin Federal and Hotchkis Wiley
Assuming the 90 days horizon Franklin Federal is expected to generate 3.88 times less return on investment than Hotchkis Wiley. But when comparing it to its historical volatility, Franklin Federal Limited Term is 10.51 times less risky than Hotchkis Wiley. It trades about 0.16 of its potential returns per unit of risk. Hotchkis Wiley Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,855 in Hotchkis Wiley Small on August 31, 2024 and sell it today you would earn a total of 1,743 from holding Hotchkis Wiley Small or generate 25.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Hotchkis Wiley Small
Performance |
| Timeline |
| Franklin Federal Lim |
| Hotchkis Wiley Small |
Franklin Federal and Hotchkis Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Hotchkis Wiley
The main advantage of trading using opposite Franklin Federal and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Hotchkis Wiley 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 Hotchkis Wiley will offset losses from the drop in Hotchkis Wiley's long position.| Franklin Federal vs. Pro Blend Moderate Term | Franklin Federal vs. Wisdomtree Siegel Moderate | Franklin Federal vs. Blackrock Moderate Prepared | Franklin Federal vs. Lifestyle Ii Moderate |
| Hotchkis Wiley vs. Ab Select Longshort | Hotchkis Wiley vs. Franklin Federal Limited Term | Hotchkis Wiley vs. Angel Oak Ultrashort | Hotchkis Wiley vs. Federated Ultrashort Bond |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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