Correlation Between Franklin Exponential and Capital Group
Can any of the company-specific risk be diversified away by investing in both Franklin Exponential and Capital Group 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 Franklin Exponential and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Exponential Data and Capital Group Global, you can compare the effects of market volatilities on Franklin Exponential and Capital Group 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 Franklin Exponential with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Exponential and Capital Group.
Diversification Opportunities for Franklin Exponential and Capital Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Capital is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Exponential Data and Capital Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Global and Franklin Exponential 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 Franklin Exponential Data are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Global has no effect on the direction of Franklin Exponential i.e., Franklin Exponential and Capital Group go up and down completely randomly.
Pair Corralation between Franklin Exponential and Capital Group
Given the investment horizon of 90 days Franklin Exponential Data is expected to under-perform the Capital Group. In addition to that, Franklin Exponential is 2.17 times more volatile than Capital Group Global. It trades about -0.1 of its total potential returns per unit of risk. Capital Group Global is currently generating about -0.02 per unit of volatility. If you would invest 2,995 in Capital Group Global on November 28, 2024 and sell it today you would lose (9.00) from holding Capital Group Global or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Exponential Data vs. Capital Group Global
Performance |
| Timeline |
| Franklin Exponential Data |
| Capital Group Global |
Franklin Exponential and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Exponential and Capital Group
The main advantage of trading using opposite Franklin Exponential and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Exponential position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Franklin Exponential vs. Franklin Disruptive Commerce | Franklin Exponential vs. Franklin Templeton ETF | Franklin Exponential vs. Esoterica NextG Economy | Franklin Exponential vs. TrueShares Technology AI |
| Capital Group vs. Capital Group Growth | Capital Group vs. Capital Group Dividend | Capital Group vs. Capital Group International | Capital Group vs. Capital Group Core |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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