Correlation Between Timothy Aggressive and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Timothy Aggressive and Franklin Natural 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 Timothy Aggressive and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timothy Aggressive Growth and Franklin Natural Resources, you can compare the effects of market volatilities on Timothy Aggressive and Franklin Natural 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 Timothy Aggressive with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Aggressive and Franklin Natural.
Diversification Opportunities for Timothy Aggressive and Franklin Natural
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Timothy and Franklin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Aggressive Growth and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Timothy Aggressive 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 Timothy Aggressive Growth are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Timothy Aggressive i.e., Timothy Aggressive and Franklin Natural go up and down completely randomly.
Pair Corralation between Timothy Aggressive and Franklin Natural
Assuming the 90 days horizon Timothy Aggressive Growth is expected to generate 1.18 times more return on investment than Franklin Natural. However, Timothy Aggressive is 1.18 times more volatile than Franklin Natural Resources. It trades about 0.4 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.23 per unit of risk. If you would invest 1,371 in Timothy Aggressive Growth on September 4, 2024 and sell it today you would earn a total of 111.00 from holding Timothy Aggressive Growth or generate 8.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timothy Aggressive Growth vs. Franklin Natural Resources
Performance |
| Timeline |
| Timothy Aggressive Growth |
| Franklin Natural Res |
Timothy Aggressive and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Aggressive and Franklin Natural
The main advantage of trading using opposite Timothy Aggressive and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Aggressive position performs unexpectedly, Franklin Natural 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 Natural will offset losses from the drop in Franklin Natural's long position.| Timothy Aggressive vs. Franklin Natural Resources | Timothy Aggressive vs. Salient Mlp Energy | Timothy Aggressive vs. Invesco Energy Fund | Timothy Aggressive vs. Gmo Resources |
| Franklin Natural vs. Qs Large Cap | Franklin Natural vs. Western Asset Municipal | Franklin Natural vs. T Rowe Price | Franklin Natural vs. Arrow Managed Futures |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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