Correlation Between Technology Ultrasector and Franklin Adjustable

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Can any of the company-specific risk be diversified away by investing in both Technology Ultrasector and Franklin Adjustable 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 Technology Ultrasector and Franklin Adjustable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Ultrasector Profund and Franklin Adjustable Government, you can compare the effects of market volatilities on Technology Ultrasector and Franklin Adjustable 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 Technology Ultrasector with a short position of Franklin Adjustable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Ultrasector and Franklin Adjustable.

Diversification Opportunities for Technology Ultrasector and Franklin Adjustable

TechnologyFranklinDiversified AwayTechnologyFranklinDiversified Away100%
-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Technology and Franklin is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Technology Ultrasector Profund and Franklin Adjustable Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Adjustable and Technology Ultrasector 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 Technology Ultrasector Profund are associated (or correlated) with Franklin Adjustable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Adjustable has no effect on the direction of Technology Ultrasector i.e., Technology Ultrasector and Franklin Adjustable go up and down completely randomly.

Pair Corralation between Technology Ultrasector and Franklin Adjustable

Assuming the 90 days horizon Technology Ultrasector Profund is expected to generate 21.52 times more return on investment than Franklin Adjustable. However, Technology Ultrasector is 21.52 times more volatile than Franklin Adjustable Government. It trades about 0.03 of its potential returns per unit of risk. Franklin Adjustable Government is currently generating about 0.19 per unit of risk. If you would invest  3,532  in Technology Ultrasector Profund on November 21, 2024 and sell it today you would earn a total of  321.00  from holding Technology Ultrasector Profund or generate 9.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Technology Ultrasector Profund  vs.  Franklin Adjustable Government

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50
JavaScript chart by amCharts 3.21.15TEPIX FCSCX
       Timeline  
Technology Ultrasector 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Technology Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Technology Ultrasector is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3536373839404142
Franklin Adjustable 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Adjustable Government are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Franklin Adjustable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7.447.467.487.57.527.54

Technology Ultrasector and Franklin Adjustable Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.86-2.89-1.92-0.95-0.01570.891.832.773.714.65 5101520253035
JavaScript chart by amCharts 3.21.15TEPIX FCSCX
       Returns  

Pair Trading with Technology Ultrasector and Franklin Adjustable

The main advantage of trading using opposite Technology Ultrasector and Franklin Adjustable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Ultrasector position performs unexpectedly, Franklin Adjustable 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 Adjustable will offset losses from the drop in Franklin Adjustable's long position.
The idea behind Technology Ultrasector Profund and Franklin Adjustable Government pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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