Correlation Between Sparta Capital and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Sparta Capital and Franklin Utilities 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 Sparta Capital and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta Capital and Franklin Utilities Fund, you can compare the effects of market volatilities on Sparta Capital and Franklin Utilities 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 Sparta Capital with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Franklin Utilities.
Diversification Opportunities for Sparta Capital and Franklin Utilities
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sparta and Franklin is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Sparta Capital 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 Sparta Capital are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Sparta Capital i.e., Sparta Capital and Franklin Utilities go up and down completely randomly.
Pair Corralation between Sparta Capital and Franklin Utilities
Assuming the 90 days horizon Sparta Capital is expected to under-perform the Franklin Utilities. In addition to that, Sparta Capital is 3.24 times more volatile than Franklin Utilities Fund. It trades about -0.12 of its total potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.18 per unit of volatility. If you would invest 2,342 in Franklin Utilities Fund on September 2, 2024 and sell it today you would earn a total of 256.00 from holding Franklin Utilities Fund or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparta Capital vs. Franklin Utilities Fund
Performance |
| Timeline |
| Sparta Capital |
| Franklin Utilities |
Sparta Capital and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparta Capital and Franklin Utilities
The main advantage of trading using opposite Sparta Capital and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta Capital position performs unexpectedly, Franklin Utilities 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 Utilities will offset losses from the drop in Franklin Utilities' long position.| Sparta Capital vs. Zurn Elkay Water | Sparta Capital vs. Federal Signal | Sparta Capital vs. Energy Recovery | Sparta Capital vs. CECO Environmental Corp |
| Franklin Utilities vs. World Energy Fund | Franklin Utilities vs. Energy Basic Materials | Franklin Utilities vs. Fidelity Advisor Energy | Franklin Utilities vs. Energy Services Fund |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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