Correlation Between NYSE Composite and Franklin
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Franklin 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 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 Government Money, you can compare the effects of market volatilities on NYSE Composite and Franklin 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Franklin.
Diversification Opportunities for NYSE Composite and Franklin
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NYSE and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of NYSE Composite i.e., NYSE Composite and Franklin go up and down completely randomly.
Pair Corralation between NYSE Composite and Franklin
Assuming the 90 days trading horizon NYSE Composite is expected to generate 6.06 times more return on investment than Franklin. However, NYSE Composite is 6.06 times more volatile than Franklin Government Money. It trades about 0.09 of its potential returns per unit of risk. Franklin Government Money is currently generating about 0.11 per unit of risk. If you would invest 1,721,232 in NYSE Composite on November 3, 2024 and sell it today you would earn a total of 278,650 from holding NYSE Composite or generate 16.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Franklin Government Money
Performance |
| Timeline |
NYSE Composite and Franklin Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Franklin Government Money
Pair trading matchups for Franklin
Pair Trading with NYSE Composite and Franklin
The main advantage of trading using opposite NYSE Composite and Franklin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Franklin 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 will offset losses from the drop in Franklin's long position.| NYSE Composite vs. Arrow Electronics | NYSE Composite vs. Cirmaker Technology | NYSE Composite vs. Zhihu Inc ADR | NYSE Composite vs. Weibo Corp |
| Franklin vs. Ironclad Managed Risk | Franklin vs. Calamos High Income | Franklin vs. Lgm Risk Managed | Franklin vs. Needham Aggressive Growth |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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