Correlation Between Health Care and Franklin Genomic
Can any of the company-specific risk be diversified away by investing in both Health Care 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 Health Care and Franklin Genomic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Select and Franklin Genomic Advancements, you can compare the effects of market volatilities on Health Care 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 Health Care with a short position of Franklin Genomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Franklin Genomic.
Diversification Opportunities for Health Care and Franklin Genomic
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Health and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Select 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 Health Care 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 Health Care Select 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 Health Care i.e., Health Care and Franklin Genomic go up and down completely randomly.
Pair Corralation between Health Care and Franklin Genomic
Considering the 90-day investment horizon Health Care Select is expected to under-perform the Franklin Genomic. But the etf apears to be less risky and, when comparing its historical volatility, Health Care Select is 1.92 times less risky than Franklin Genomic. The etf trades about -0.17 of its potential returns per unit of risk. The Franklin Genomic Advancements is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 3,072 in Franklin Genomic Advancements on August 26, 2024 and sell it today you would lose (86.00) from holding Franklin Genomic Advancements or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Select vs. Franklin Genomic Advancements
Performance |
| Timeline |
| Health Care Select |
| Franklin Genomic Adv |
Health Care and Franklin Genomic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Franklin Genomic
The main advantage of trading using opposite Health Care and Franklin Genomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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.| Health Care vs. Global X Clean | Health Care vs. Global X Renewable | Health Care vs. Global X Thematic | Health Care vs. Global X AgTech |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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