Correlation Between Global Diversified and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Global Diversified and Franklin Natural 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 Global Diversified and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Diversified Income and Franklin Natural Resources, you can compare the effects of market volatilities on Global Diversified and Franklin Natural 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 Global Diversified with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Diversified and Franklin Natural.
Diversification Opportunities for Global Diversified and Franklin Natural
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Franklin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Global Diversified Income and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Global Diversified 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 Global Diversified Income are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Global Diversified i.e., Global Diversified and Franklin Natural go up and down completely randomly.
Pair Corralation between Global Diversified and Franklin Natural
Assuming the 90 days horizon Global Diversified Income is expected to generate 0.19 times more return on investment than Franklin Natural. However, Global Diversified Income is 5.34 times less risky than Franklin Natural. It trades about -0.06 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about -0.11 per unit of risk. If you would invest 1,195 in Global Diversified Income on November 3, 2024 and sell it today you would lose (6.00) from holding Global Diversified Income or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Diversified Income vs. Franklin Natural Resources
Performance |
| Timeline |
| Global Diversified Income |
| Franklin Natural Res |
Global Diversified and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Diversified and Franklin Natural
The main advantage of trading using opposite Global Diversified and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Diversified position performs unexpectedly, Franklin Natural 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 Natural will offset losses from the drop in Franklin Natural's long position.| Global Diversified vs. Cref Money Market | Global Diversified vs. Rmb Mendon Financial | Global Diversified vs. Fidelity Advisor Financial | Global Diversified vs. Voya Government Money |
| Franklin Natural vs. Fidelity Sai Convertible | Franklin Natural vs. Putnam Convertible Securities | Franklin Natural vs. Rationalpier 88 Convertible | Franklin Natural vs. Advent Claymore Convertible |
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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