Correlation Between Ivy Small and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Ivy Small 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 Ivy Small and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivy Small Cap and Franklin Natural Resources, you can compare the effects of market volatilities on Ivy Small 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 Ivy Small with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivy Small and Franklin Natural.
Diversification Opportunities for Ivy Small and Franklin Natural
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ivy and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Small Cap 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 Ivy Small 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 Ivy Small Cap 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 Ivy Small i.e., Ivy Small and Franklin Natural go up and down completely randomly.
Pair Corralation between Ivy Small and Franklin Natural
Assuming the 90 days horizon Ivy Small Cap is expected to generate 1.86 times more return on investment than Franklin Natural. However, Ivy Small is 1.86 times more volatile than Franklin Natural Resources. It trades about 0.26 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.2 per unit of risk. If you would invest 1,214 in Ivy Small Cap on August 31, 2024 and sell it today you would earn a total of 118.00 from holding Ivy Small Cap or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ivy Small Cap vs. Franklin Natural Resources
Performance |
| Timeline |
| Ivy Small Cap |
| Franklin Natural Res |
Ivy Small and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivy Small and Franklin Natural
The main advantage of trading using opposite Ivy Small and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivy Small 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.| Ivy Small vs. Franklin Natural Resources | Ivy Small vs. Fidelity Advisor Energy | Ivy Small vs. Goehring Rozencwajg Resources | Ivy Small vs. Gmo Resources |
| Franklin Natural vs. Lord Abbett Government | Franklin Natural vs. Government Securities Fund | Franklin Natural vs. Us Government Securities | Franklin Natural vs. Aig Government Money |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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