Correlation Between Franklin Federal and Rational Special
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Rational Special 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 Rational Special 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 Rational Special Situations, you can compare the effects of market volatilities on Franklin Federal and Rational Special 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 Rational Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Rational Special.
Diversification Opportunities for Franklin Federal and Rational Special
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FRANKLIN and Rational is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Rational Special Situations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Special Sit 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 Rational Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Special Sit has no effect on the direction of Franklin Federal i.e., Franklin Federal and Rational Special go up and down completely randomly.
Pair Corralation between Franklin Federal and Rational Special
Assuming the 90 days horizon Franklin Federal is expected to generate 1.48 times less return on investment than Rational Special. In addition to that, Franklin Federal is 1.1 times more volatile than Rational Special Situations. It trades about 0.13 of its total potential returns per unit of risk. Rational Special Situations is currently generating about 0.2 per unit of volatility. If you would invest 1,654 in Rational Special Situations on August 27, 2024 and sell it today you would earn a total of 160.00 from holding Rational Special Situations or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Rational Special Situations
Performance |
| Timeline |
| Franklin Federal Lim |
| Rational Special Sit |
Franklin Federal and Rational Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Rational Special
The main advantage of trading using opposite Franklin Federal and Rational Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Rational Special 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 Rational Special will offset losses from the drop in Rational Special's long position.| Franklin Federal vs. Small Cap Stock | Franklin Federal vs. Ips Strategic Capital | Franklin Federal vs. Morgan Stanley Institutional | Franklin Federal vs. Archer Balanced Fund |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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