Correlation Between SPDR SP and Franklin Genomic
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Franklin Genomic 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 SPDR SP and Franklin Genomic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Biotech and Franklin Genomic Advancements, you can compare the effects of market volatilities on SPDR SP and Franklin Genomic 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 SPDR SP with a short position of Franklin Genomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Franklin Genomic.
Diversification Opportunities for SPDR SP and Franklin Genomic
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Franklin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Biotech and Franklin Genomic Advancements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Genomic Adv and SPDR SP 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 SPDR SP Biotech are associated (or correlated) with Franklin Genomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Genomic Adv has no effect on the direction of SPDR SP i.e., SPDR SP and Franklin Genomic go up and down completely randomly.
Pair Corralation between SPDR SP and Franklin Genomic
Considering the 90-day investment horizon SPDR SP Biotech is expected to generate 1.15 times more return on investment than Franklin Genomic. However, SPDR SP is 1.15 times more volatile than Franklin Genomic Advancements. It trades about -0.02 of its potential returns per unit of risk. Franklin Genomic Advancements is currently generating about -0.11 per unit of risk. If you would invest 9,775 in SPDR SP Biotech on August 26, 2024 and sell it today you would lose (151.00) from holding SPDR SP Biotech or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Biotech vs. Franklin Genomic Advancements
Performance |
| Timeline |
| SPDR SP Biotech |
| Franklin Genomic Adv |
SPDR SP and Franklin Genomic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Franklin Genomic
The main advantage of trading using opposite SPDR SP and Franklin Genomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Franklin Genomic 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 Genomic will offset losses from the drop in Franklin Genomic's long position.| SPDR SP vs. iShares Biotechnology ETF | SPDR SP vs. Health Care Select | SPDR SP vs. Technology Select Sector | SPDR SP vs. Industrial Select Sector |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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