Correlation Between 1919 Financial and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both 1919 Financial and Franklin Mutual 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 1919 Financial and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1919 Financial Services and Franklin Mutual Financial, you can compare the effects of market volatilities on 1919 Financial and Franklin Mutual 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 1919 Financial with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1919 Financial and Franklin Mutual.
Diversification Opportunities for 1919 Financial and Franklin Mutual
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 1919 and Franklin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding 1919 Financial Services and Franklin Mutual Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Financial and 1919 Financial 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 1919 Financial Services are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Financial has no effect on the direction of 1919 Financial i.e., 1919 Financial and Franklin Mutual go up and down completely randomly.
Pair Corralation between 1919 Financial and Franklin Mutual
Assuming the 90 days horizon 1919 Financial is expected to generate 3.99 times less return on investment than Franklin Mutual. In addition to that, 1919 Financial is 1.29 times more volatile than Franklin Mutual Financial. It trades about 0.01 of its total potential returns per unit of risk. Franklin Mutual Financial is currently generating about 0.05 per unit of volatility. If you would invest 2,171 in Franklin Mutual Financial on January 19, 2024 and sell it today you would earn a total of 587.00 from holding Franklin Mutual Financial or generate 27.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
1919 Financial Services vs. Franklin Mutual Financial
Performance |
| Timeline |
| 1919 Financial Services |
| Franklin Mutual Financial |
1919 Financial and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1919 Financial and Franklin Mutual
The main advantage of trading using opposite 1919 Financial and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1919 Financial position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| 1919 Financial vs. Aqr Long Short Equity | 1919 Financial vs. Prudential Short Duration | 1919 Financial vs. Jhancock Short Duration | 1919 Financial vs. Touchstone Ultra Short |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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