Correlation Between Mainstay Epoch and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Mainstay Epoch 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 Mainstay Epoch and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Epoch International and Franklin Natural Resources, you can compare the effects of market volatilities on Mainstay Epoch 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 Mainstay Epoch with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Epoch and Franklin Natural.
Diversification Opportunities for Mainstay Epoch and Franklin Natural
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mainstay and Franklin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Epoch International 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 Mainstay Epoch 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 Mainstay Epoch International 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 Mainstay Epoch i.e., Mainstay Epoch and Franklin Natural go up and down completely randomly.
Pair Corralation between Mainstay Epoch and Franklin Natural
Assuming the 90 days horizon Mainstay Epoch International is expected to under-perform the Franklin Natural. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mainstay Epoch International is 1.15 times less risky than Franklin Natural. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Franklin Natural Resources is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,061 in Franklin Natural Resources on September 4, 2024 and sell it today you would earn a total of 116.00 from holding Franklin Natural Resources or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Mainstay Epoch International vs. Franklin Natural Resources
Performance |
| Timeline |
| Mainstay Epoch Inter |
| Franklin Natural Res |
Mainstay Epoch and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Epoch and Franklin Natural
The main advantage of trading using opposite Mainstay Epoch and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Epoch 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.The idea behind Mainstay Epoch International and Franklin Natural Resources 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.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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