Correlation Between Spirit Of and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Spirit Of 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 Spirit Of and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirit Of America and Franklin Utilities Fund, you can compare the effects of market volatilities on Spirit Of 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 Spirit Of with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Of and Franklin Utilities.
Diversification Opportunities for Spirit Of and Franklin Utilities
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Spirit and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Of America and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Spirit Of 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 Spirit Of America 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 Spirit Of i.e., Spirit Of and Franklin Utilities go up and down completely randomly.
Pair Corralation between Spirit Of and Franklin Utilities
Assuming the 90 days horizon Spirit Of is expected to generate 1.26 times less return on investment than Franklin Utilities. But when comparing it to its historical volatility, Spirit Of America is 1.01 times less risky than Franklin Utilities. It trades about 0.26 of its potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,426 in Franklin Utilities Fund on August 31, 2024 and sell it today you would earn a total of 170.00 from holding Franklin Utilities Fund or generate 7.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirit Of America vs. Franklin Utilities Fund
Performance |
| Timeline |
| Spirit Of America |
| Franklin Utilities |
Spirit Of and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirit Of and Franklin Utilities
The main advantage of trading using opposite Spirit Of and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Of 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.| Spirit Of vs. Franklin Utilities Fund | Spirit Of vs. Franklin Utilities Fund | Spirit Of vs. Franklin Utilities | Spirit Of vs. Franklin Utilities Fund |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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