Correlation Between Wanger International and Franklin High
Can any of the company-specific risk be diversified away by investing in both Wanger 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 Wanger 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 Wanger International Wanger and Franklin High Income, you can compare the effects of market volatilities on Wanger 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 Wanger International with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanger International and Franklin High.
Diversification Opportunities for Wanger International and Franklin High
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wanger and Franklin is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wanger International Wanger and Franklin High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Income and Wanger 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 Wanger International Wanger 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 Income has no effect on the direction of Wanger International i.e., Wanger International and Franklin High go up and down completely randomly.
Pair Corralation between Wanger International and Franklin High
Assuming the 90 days horizon Wanger International Wanger is expected to generate 3.0 times more return on investment than Franklin High. However, Wanger International is 3.0 times more volatile than Franklin High Income. It trades about 0.12 of its potential returns per unit of risk. Franklin High Income is currently generating about 0.31 per unit of risk. If you would invest 1,835 in Wanger International Wanger on October 20, 2024 and sell it today you would earn a total of 37.00 from holding Wanger International Wanger or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanger International Wanger vs. Franklin High Income
Performance |
| Timeline |
| Wanger International |
| Franklin High Income |
Wanger International and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanger International and Franklin High
The main advantage of trading using opposite Wanger International and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanger 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.The idea behind Wanger International Wanger and Franklin High Income 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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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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