Correlation Between NYSE Composite and Franklin Total
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Franklin Total 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 NYSE Composite and Franklin Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Franklin Total Return, you can compare the effects of market volatilities on NYSE Composite and Franklin Total 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 NYSE Composite with a short position of Franklin Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Franklin Total.
Diversification Opportunities for NYSE Composite and Franklin Total
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Franklin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Franklin Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Total Return and NYSE Composite 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 NYSE Composite are associated (or correlated) with Franklin Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Total Return has no effect on the direction of NYSE Composite i.e., NYSE Composite and Franklin Total go up and down completely randomly.
Pair Corralation between NYSE Composite and Franklin Total
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.79 times more return on investment than Franklin Total. However, NYSE Composite is 1.79 times more volatile than Franklin Total Return. It trades about 0.07 of its potential returns per unit of risk. Franklin Total Return is currently generating about 0.03 per unit of risk. If you would invest 1,602,511 in NYSE Composite on November 5, 2024 and sell it today you would earn a total of 397,371 from holding NYSE Composite or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Franklin Total Return
Performance |
| Timeline |
NYSE Composite and Franklin Total Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Franklin Total Return
Pair trading matchups for Franklin Total
Pair Trading with NYSE Composite and Franklin Total
The main advantage of trading using opposite NYSE Composite and Franklin Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Franklin Total 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 Total will offset losses from the drop in Franklin Total's long position.| NYSE Composite vs. Lion One Metals | NYSE Composite vs. Codexis | NYSE Composite vs. Yuexiu Transport Infrastructure | NYSE Composite vs. Saia Inc |
| Franklin Total vs. Aqr Sustainable Long Short | Franklin Total vs. Nuveen Short Term | Franklin Total vs. Transam Short Term Bond | Franklin Total vs. Blackrock Short Obligations |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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