Correlation Between Nationwide Inflation-protec and Franklin Balanced
Can any of the company-specific risk be diversified away by investing in both Nationwide Inflation-protec and Franklin Balanced 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 Nationwide Inflation-protec and Franklin Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Inflation Protected Securities and Franklin Balanced Fund, you can compare the effects of market volatilities on Nationwide Inflation-protec and Franklin Balanced 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 Nationwide Inflation-protec with a short position of Franklin Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Inflation-protec and Franklin Balanced.
Diversification Opportunities for Nationwide Inflation-protec and Franklin Balanced
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NATIONWIDE and Franklin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Inflation Protected and Franklin Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Balanced and Nationwide Inflation-protec 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 Nationwide Inflation Protected Securities are associated (or correlated) with Franklin Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Balanced has no effect on the direction of Nationwide Inflation-protec i.e., Nationwide Inflation-protec and Franklin Balanced go up and down completely randomly.
Pair Corralation between Nationwide Inflation-protec and Franklin Balanced
Assuming the 90 days horizon Nationwide Inflation-protec is expected to generate 2.31 times less return on investment than Franklin Balanced. But when comparing it to its historical volatility, Nationwide Inflation Protected Securities is 1.25 times less risky than Franklin Balanced. It trades about 0.07 of its potential returns per unit of risk. Franklin Balanced Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,152 in Franklin Balanced Fund on September 2, 2024 and sell it today you would earn a total of 136.00 from holding Franklin Balanced Fund or generate 11.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Inflation Protected vs. Franklin Balanced Fund
Performance |
| Timeline |
| Nationwide Inflation-protec |
| Franklin Balanced |
Nationwide Inflation-protec and Franklin Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Inflation-protec and Franklin Balanced
The main advantage of trading using opposite Nationwide Inflation-protec and Franklin Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Inflation-protec position performs unexpectedly, Franklin Balanced 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 Balanced will offset losses from the drop in Franklin Balanced's long position.The idea behind Nationwide Inflation Protected Securities and Franklin Balanced Fund 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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