Correlation Between Global Technology and Franklin Strategic
Can any of the company-specific risk be diversified away by investing in both Global Technology and Franklin Strategic 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 Global Technology and Franklin Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Technology Portfolio and Franklin Strategic Series, you can compare the effects of market volatilities on Global Technology and Franklin Strategic 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 Global Technology with a short position of Franklin Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and Franklin Strategic.
Diversification Opportunities for Global Technology and Franklin Strategic
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Franklin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and Franklin Strategic Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic Series and Global Technology 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 Global Technology Portfolio are associated (or correlated) with Franklin Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic Series has no effect on the direction of Global Technology i.e., Global Technology and Franklin Strategic go up and down completely randomly.
Pair Corralation between Global Technology and Franklin Strategic
Assuming the 90 days horizon Global Technology Portfolio is expected to generate 2.82 times more return on investment than Franklin Strategic. However, Global Technology is 2.82 times more volatile than Franklin Strategic Series. It trades about 0.06 of its potential returns per unit of risk. Franklin Strategic Series is currently generating about 0.12 per unit of risk. If you would invest 1,912 in Global Technology Portfolio on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Global Technology Portfolio or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Global Technology Portfolio vs. Franklin Strategic Series
Performance |
| Timeline |
| Global Technology |
| Franklin Strategic Series |
Global Technology and Franklin Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Technology and Franklin Strategic
The main advantage of trading using opposite Global Technology and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology position performs unexpectedly, Franklin Strategic 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 Strategic will offset losses from the drop in Franklin Strategic's long position.| Global Technology vs. Adams Diversified Equity | Global Technology vs. Fidelity Advisor Diversified | Global Technology vs. Western Asset Diversified | Global Technology vs. Harbor Diversified International |
| Franklin Strategic vs. Dreyfus Technology Growth | Franklin Strategic vs. Science Technology Fund | Franklin Strategic vs. Goldman Sachs Technology | Franklin Strategic vs. Mfs Technology Fund |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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