Correlation Between Franklin Federal and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Stone Harbor 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 Stone Harbor 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 Stone Harbor Strategic, you can compare the effects of market volatilities on Franklin Federal and Stone Harbor 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 Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Stone Harbor.
Diversification Opportunities for Franklin Federal and Stone Harbor
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Stone is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Stone Harbor Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Strategic 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 Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Strategic has no effect on the direction of Franklin Federal i.e., Franklin Federal and Stone Harbor go up and down completely randomly.
Pair Corralation between Franklin Federal and Stone Harbor
Assuming the 90 days horizon Franklin Federal is expected to generate 1.63 times less return on investment than Stone Harbor. But when comparing it to its historical volatility, Franklin Federal Limited Term is 2.13 times less risky than Stone Harbor. It trades about 0.15 of its potential returns per unit of risk. Stone Harbor Strategic is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 813.00 in Stone Harbor Strategic on September 13, 2024 and sell it today you would earn a total of 31.00 from holding Stone Harbor Strategic or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 29.15% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Stone Harbor Strategic
Performance |
| Timeline |
| Franklin Federal Lim |
| Stone Harbor Strategic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franklin Federal and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Stone Harbor
The main advantage of trading using opposite Franklin Federal and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.| Franklin Federal vs. Franklin Mutual Beacon | Franklin Federal vs. Templeton Developing Markets | Franklin Federal vs. Franklin Mutual Global | Franklin Federal vs. Franklin Mutual Global |
| Stone Harbor vs. Boston Partners Longshort | Stone Harbor vs. Touchstone Ultra Short | Stone Harbor vs. Easterly Snow Longshort | Stone Harbor vs. Franklin Federal Limited Term |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |