Correlation Between Highland Longshort and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Highland Longshort and Franklin Natural 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 Highland Longshort and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Longshort Healthcare and Franklin Natural Resources, you can compare the effects of market volatilities on Highland Longshort and Franklin Natural 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 Highland Longshort with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Longshort and Franklin Natural.
Diversification Opportunities for Highland Longshort and Franklin Natural
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highland and Franklin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Highland Longshort 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 Highland Longshort Healthcare are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Highland Longshort i.e., Highland Longshort and Franklin Natural go up and down completely randomly.
Pair Corralation between Highland Longshort and Franklin Natural
Assuming the 90 days horizon Highland Longshort Healthcare is expected to generate 0.21 times more return on investment than Franklin Natural. However, Highland Longshort Healthcare is 4.84 times less risky than Franklin Natural. It trades about 0.17 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.03 per unit of risk. If you would invest 1,625 in Highland Longshort Healthcare on August 30, 2024 and sell it today you would earn a total of 36.00 from holding Highland Longshort Healthcare or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Franklin Natural Resources
Performance |
| Timeline |
| Highland Longshort |
| Franklin Natural Res |
Highland Longshort and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Longshort and Franklin Natural
The main advantage of trading using opposite Highland Longshort and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Longshort position performs unexpectedly, Franklin Natural 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 Franklin Natural will offset losses from the drop in Franklin Natural's long position.| Highland Longshort vs. Short Term Government Fund | Highland Longshort vs. Franklin Adjustable Government | Highland Longshort vs. Government Securities Fund | Highland Longshort vs. Franklin Government Money |
| Franklin Natural vs. Lord Abbett Government | Franklin Natural vs. Government Securities Fund | Franklin Natural vs. Us Government Securities | Franklin Natural vs. Aig Government Money |
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.
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