Correlation Between Alphacentric Hedged and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Alphacentric Hedged and Franklin Convertible 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 Alphacentric Hedged and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphacentric Hedged Market and Franklin Vertible Securities, you can compare the effects of market volatilities on Alphacentric Hedged and Franklin Convertible 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 Alphacentric Hedged with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphacentric Hedged and Franklin Convertible.
Diversification Opportunities for Alphacentric Hedged and Franklin Convertible
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alphacentric and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Hedged Market and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and Alphacentric Hedged 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 Alphacentric Hedged Market are associated (or correlated) with Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of Alphacentric Hedged i.e., Alphacentric Hedged and Franklin Convertible go up and down completely randomly.
Pair Corralation between Alphacentric Hedged and Franklin Convertible
Assuming the 90 days horizon Alphacentric Hedged Market is expected to generate 1.09 times more return on investment than Franklin Convertible. However, Alphacentric Hedged is 1.09 times more volatile than Franklin Vertible Securities. It trades about 0.06 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.06 per unit of risk. If you would invest 2,342 in Alphacentric Hedged Market on October 13, 2024 and sell it today you would earn a total of 425.00 from holding Alphacentric Hedged Market or generate 18.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphacentric Hedged Market vs. Franklin Vertible Securities
Performance |
| Timeline |
| Alphacentric Hedged |
| Franklin Convertible |
Alphacentric Hedged and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphacentric Hedged and Franklin Convertible
The main advantage of trading using opposite Alphacentric Hedged and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphacentric Hedged position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.The idea behind Alphacentric Hedged Market and Franklin Vertible Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Franklin Convertible vs. Alphacentric Hedged Market | Franklin Convertible vs. T Rowe Price | Franklin Convertible vs. Aqr Sustainable Long Short | Franklin Convertible vs. Artisan Developing World |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |