Correlation Between Transamerica International and Franklin High
Can any of the company-specific risk be diversified away by investing in both Transamerica International and Franklin High 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 Transamerica International and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica International Equity and Franklin High Yield, you can compare the effects of market volatilities on Transamerica International and Franklin High 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 Transamerica International with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica International and Franklin High.
Diversification Opportunities for Transamerica International and Franklin High
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Franklin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica International Equ and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and Transamerica International 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 Transamerica International Equity are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Transamerica International i.e., Transamerica International and Franklin High go up and down completely randomly.
Pair Corralation between Transamerica International and Franklin High
Assuming the 90 days horizon Transamerica International Equity is expected to generate 2.78 times more return on investment than Franklin High. However, Transamerica International is 2.78 times more volatile than Franklin High Yield. It trades about 0.06 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.09 per unit of risk. If you would invest 1,817 in Transamerica International Equity on November 27, 2024 and sell it today you would earn a total of 436.00 from holding Transamerica International Equity or generate 24.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica International Equ vs. Franklin High Yield
Performance |
| Timeline |
| Transamerica International |
| Franklin High Yield |
Transamerica International and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica International and Franklin High
The main advantage of trading using opposite Transamerica International and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica International position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Transamerica International vs. Channing Intrinsic Value | Transamerica International vs. Ishares Russell 2000 | Transamerica International vs. Fidelity Small Cap | Transamerica International vs. T Rowe Price |
| Franklin High vs. Rbc Emerging Markets | Franklin High vs. Buffalo High Yield | Franklin High vs. T Rowe Price | Franklin High vs. Intal High Relative |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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