Correlation Between Sierra Core and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Sierra Core and Franklin Growth 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 Sierra Core and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra E Retirement and Franklin Growth Fund, you can compare the effects of market volatilities on Sierra Core and Franklin Growth 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 Sierra Core with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Core and Franklin Growth.
Diversification Opportunities for Sierra Core and Franklin Growth
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sierra and Franklin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth and Sierra Core 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 Sierra E Retirement are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth has no effect on the direction of Sierra Core i.e., Sierra Core and Franklin Growth go up and down completely randomly.
Pair Corralation between Sierra Core and Franklin Growth
Assuming the 90 days horizon Sierra Core is expected to generate 2.37 times less return on investment than Franklin Growth. But when comparing it to its historical volatility, Sierra E Retirement is 2.26 times less risky than Franklin Growth. It trades about 0.12 of its potential returns per unit of risk. Franklin Growth Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 13,725 in Franklin Growth Fund on October 25, 2024 and sell it today you would earn a total of 282.00 from holding Franklin Growth Fund or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sierra E Retirement vs. Franklin Growth Fund
Performance |
| Timeline |
| Sierra E Retirement |
| Franklin Growth |
Sierra Core and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Core and Franklin Growth
The main advantage of trading using opposite Sierra Core and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Core position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Sierra Core vs. All Asset Fund | Sierra Core vs. Pimco All Asset | Sierra Core vs. All Asset Fund | Sierra Core vs. Pimco All Asset |
| Franklin Growth vs. Voya Government Money | Franklin Growth vs. Aig Government Money | Franklin Growth vs. Virtus Seix Government | Franklin Growth vs. Short Term Government 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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