Correlation Between Columbia Convertible and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Columbia Convertible and Franklin Convertible 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 Columbia Convertible and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Vertible Securities and Franklin Vertible Securities, you can compare the effects of market volatilities on Columbia Convertible and Franklin Convertible 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 Columbia Convertible with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Convertible and Franklin Convertible.
Diversification Opportunities for Columbia Convertible and Franklin Convertible
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Columbia and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Vertible Securities and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and Columbia Convertible 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 Columbia Vertible Securities are associated (or correlated) with Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of Columbia Convertible i.e., Columbia Convertible and Franklin Convertible go up and down completely randomly.
Pair Corralation between Columbia Convertible and Franklin Convertible
Assuming the 90 days horizon Columbia Convertible is expected to generate 1.23 times less return on investment than Franklin Convertible. But when comparing it to its historical volatility, Columbia Vertible Securities is 1.19 times less risky than Franklin Convertible. It trades about 0.58 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest 2,293 in Franklin Vertible Securities on September 1, 2024 and sell it today you would earn a total of 169.00 from holding Franklin Vertible Securities or generate 7.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Columbia Vertible Securities vs. Franklin Vertible Securities
Performance |
| Timeline |
| Columbia Convertible |
| Franklin Convertible |
Columbia Convertible and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Convertible and Franklin Convertible
The main advantage of trading using opposite Columbia Convertible and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Convertible position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.| Columbia Convertible vs. Towpath Technology | Columbia Convertible vs. Biotechnology Fund Class | Columbia Convertible vs. Columbia Global Technology | Columbia Convertible vs. Hennessy Technology Fund |
| Franklin Convertible vs. Franklin Equity Income | Franklin Convertible vs. Franklin Utilities Fund | Franklin Convertible vs. Franklin Strategic Income | Franklin Convertible vs. Franklin Rising Dividends |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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