Correlation Between Palm Valley and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Palm Valley 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 Palm Valley and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palm Valley Capital and Franklin Vertible Securities, you can compare the effects of market volatilities on Palm Valley 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 Palm Valley with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palm Valley and Franklin Convertible.
Diversification Opportunities for Palm Valley and Franklin Convertible
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Palm and Franklin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Palm Valley Capital and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and Palm Valley 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 Palm Valley Capital 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 Palm Valley i.e., Palm Valley and Franklin Convertible go up and down completely randomly.
Pair Corralation between Palm Valley and Franklin Convertible
Assuming the 90 days horizon Palm Valley is expected to generate 2.3 times less return on investment than Franklin Convertible. But when comparing it to its historical volatility, Palm Valley Capital is 2.61 times less risky than Franklin Convertible. It trades about 0.11 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,969 in Franklin Vertible Securities on September 3, 2024 and sell it today you would earn a total of 519.00 from holding Franklin Vertible Securities or generate 26.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palm Valley Capital vs. Franklin Vertible Securities
Performance |
| Timeline |
| Palm Valley Capital |
| Franklin Convertible |
Palm Valley and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palm Valley and Franklin Convertible
The main advantage of trading using opposite Palm Valley and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palm Valley 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.| Palm Valley vs. Horizon Kinetics Inflation | Palm Valley vs. Simplify Interest Rate | Palm Valley vs. Standpoint Multi Asset | Palm Valley vs. Goehring Rozencwajg Resources |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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