Correlation Between Franklin Utilities and The Short
Can any of the company-specific risk be diversified away by investing in both Franklin Utilities and The Short 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 Utilities and The Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Utilities Fund and The Short Term, you can compare the effects of market volatilities on Franklin Utilities and The Short 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 Utilities with a short position of The Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Utilities and The Short.
Diversification Opportunities for Franklin Utilities and The Short
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and The is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Utilities Fund and The Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term and Franklin Utilities 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 Utilities Fund are associated (or correlated) with The Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term has no effect on the direction of Franklin Utilities i.e., Franklin Utilities and The Short go up and down completely randomly.
Pair Corralation between Franklin Utilities and The Short
Assuming the 90 days horizon Franklin Utilities Fund is expected to generate 9.53 times more return on investment than The Short. However, Franklin Utilities is 9.53 times more volatile than The Short Term. It trades about 0.28 of its potential returns per unit of risk. The Short Term is currently generating about 0.12 per unit of risk. If you would invest 2,482 in Franklin Utilities Fund on September 1, 2024 and sell it today you would earn a total of 145.00 from holding Franklin Utilities Fund or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Utilities Fund vs. The Short Term
Performance |
| Timeline |
| Franklin Utilities |
| Short Term |
Franklin Utilities and The Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Utilities and The Short
The main advantage of trading using opposite Franklin Utilities and The Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Utilities position performs unexpectedly, The Short 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 The Short will offset losses from the drop in The Short's long position.| Franklin Utilities vs. The Short Term | Franklin Utilities vs. Rbc Short Duration | Franklin Utilities vs. Maryland Short Term Tax Free | Franklin Utilities vs. Franklin Federal Limited Term |
| The Short vs. Dws Government Money | The Short vs. Us Government Securities | The Short vs. Franklin Adjustable Government | The Short vs. Inverse Government Long |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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