Correlation Between Hotchkis Wiley and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Hotchkis Wiley 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 Hotchkis Wiley and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotchkis Wiley Large and Franklin Natural Resources, you can compare the effects of market volatilities on Hotchkis Wiley 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 Hotchkis Wiley with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotchkis Wiley and Franklin Natural.
Diversification Opportunities for Hotchkis Wiley and Franklin Natural
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hotchkis and Franklin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hotchkis Wiley Large 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 Hotchkis Wiley 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 Hotchkis Wiley Large 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 Hotchkis Wiley i.e., Hotchkis Wiley and Franklin Natural go up and down completely randomly.
Pair Corralation between Hotchkis Wiley and Franklin Natural
Assuming the 90 days horizon Hotchkis Wiley Large is expected to generate 1.02 times more return on investment than Franklin Natural. However, Hotchkis Wiley is 1.02 times more volatile than Franklin Natural Resources. It trades about 0.06 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.02 per unit of risk. If you would invest 3,576 in Hotchkis Wiley Large on August 31, 2024 and sell it today you would earn a total of 1,293 from holding Hotchkis Wiley Large or generate 36.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotchkis Wiley Large vs. Franklin Natural Resources
Performance |
| Timeline |
| Hotchkis Wiley Large |
| Franklin Natural Res |
Hotchkis Wiley and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotchkis Wiley and Franklin Natural
The main advantage of trading using opposite Hotchkis Wiley and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotchkis Wiley 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.| Hotchkis Wiley vs. Gmo Resources | Hotchkis Wiley vs. Short Oil Gas | Hotchkis Wiley vs. Calvert Global Energy | Hotchkis Wiley vs. World Energy Fund |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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