Correlation Between Mainstay Vertible and Franklin Vertible
Can any of the company-specific risk be diversified away by investing in both Mainstay Vertible and Franklin Vertible 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 Vertible and Franklin Vertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Vertible Fund and Franklin Vertible Securities, you can compare the effects of market volatilities on Mainstay Vertible and Franklin Vertible 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 Vertible with a short position of Franklin Vertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Vertible and Franklin Vertible.
Diversification Opportunities for Mainstay Vertible and Franklin Vertible
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mainstay and Franklin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Vertible Fund and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Vertible and Mainstay Vertible 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 Vertible Fund are associated (or correlated) with Franklin Vertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Vertible has no effect on the direction of Mainstay Vertible i.e., Mainstay Vertible and Franklin Vertible go up and down completely randomly.
Pair Corralation between Mainstay Vertible and Franklin Vertible
Assuming the 90 days horizon Mainstay Vertible is expected to generate 1.55 times less return on investment than Franklin Vertible. But when comparing it to its historical volatility, Mainstay Vertible Fund is 1.06 times less risky than Franklin Vertible. It trades about 0.16 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,125 in Franklin Vertible Securities on September 12, 2024 and sell it today you would earn a total of 325.00 from holding Franklin Vertible Securities or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Vertible Fund vs. Franklin Vertible Securities
Performance |
| Timeline |
| Mainstay Vertible |
| Franklin Vertible |
Mainstay Vertible and Franklin Vertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Vertible and Franklin Vertible
The main advantage of trading using opposite Mainstay Vertible and Franklin Vertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Vertible position performs unexpectedly, Franklin Vertible 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 Vertible will offset losses from the drop in Franklin Vertible's long position.The idea behind Mainstay Vertible Fund 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.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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