Correlation Between Longleaf Partners and Franklin High
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners and Franklin High 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 Longleaf Partners and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longleaf Partners Global and Franklin High Yield, you can compare the effects of market volatilities on Longleaf Partners and Franklin High 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 Longleaf Partners with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Franklin High.
Diversification Opportunities for Longleaf Partners and Franklin High
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Longleaf and Franklin is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Global and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and Longleaf Partners 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 Longleaf Partners Global are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Franklin High go up and down completely randomly.
Pair Corralation between Longleaf Partners and Franklin High
Assuming the 90 days horizon Longleaf Partners Global is expected to generate 2.96 times more return on investment than Franklin High. However, Longleaf Partners is 2.96 times more volatile than Franklin High Yield. It trades about 0.09 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.16 per unit of risk. If you would invest 1,318 in Longleaf Partners Global on September 3, 2024 and sell it today you would earn a total of 113.00 from holding Longleaf Partners Global or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longleaf Partners Global vs. Franklin High Yield
Performance |
| Timeline |
| Longleaf Partners Global |
| Franklin High Yield |
Longleaf Partners and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Franklin High
The main advantage of trading using opposite Longleaf Partners and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.The idea behind Longleaf Partners Global and Franklin High Yield 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 High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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