Correlation Between RBC Target and Franklin Global
Can any of the company-specific risk be diversified away by investing in both RBC Target and Franklin Global 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 RBC Target and Franklin Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC Target 2026 and Franklin Global Aggregate, you can compare the effects of market volatilities on RBC Target and Franklin Global 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 RBC Target with a short position of Franklin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Target and Franklin Global.
Diversification Opportunities for RBC Target and Franklin Global
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RBC and Franklin is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding RBC Target 2026 and Franklin Global Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Global Aggregate and RBC Target 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 RBC Target 2026 are associated (or correlated) with Franklin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Global Aggregate has no effect on the direction of RBC Target i.e., RBC Target and Franklin Global go up and down completely randomly.
Pair Corralation between RBC Target and Franklin Global
Assuming the 90 days trading horizon RBC Target is expected to generate 1.19 times less return on investment than Franklin Global. But when comparing it to its historical volatility, RBC Target 2026 is 3.32 times less risky than Franklin Global. It trades about 0.29 of its potential returns per unit of risk. Franklin Global Aggregate is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,827 in Franklin Global Aggregate on August 29, 2024 and sell it today you would earn a total of 81.00 from holding Franklin Global Aggregate or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Target 2026 vs. Franklin Global Aggregate
Performance |
| Timeline |
| RBC Target 2026 |
| Franklin Global Aggregate |
RBC Target and Franklin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Target and Franklin Global
The main advantage of trading using opposite RBC Target and Franklin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Target position performs unexpectedly, Franklin Global 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 Global will offset losses from the drop in Franklin Global's long position.| RBC Target vs. Franklin Global Aggregate | RBC Target vs. Franklin Large Cap | RBC Target vs. First Trust Senior | RBC Target vs. BMO Aggregate Bond |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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