Correlation Between Franklin Resources and Aflac Incorporated

Can any of the company-specific risk be diversified away by investing in both Franklin Resources and Aflac Incorporated 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 Resources and Aflac Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Resources and Aflac Incorporated, you can compare the effects of market volatilities on Franklin Resources and Aflac Incorporated 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 Resources with a short position of Aflac Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Resources and Aflac Incorporated.

Diversification Opportunities for Franklin Resources and Aflac Incorporated

-0.29

Correlation Coefficient

Franklin Resources  Aflac Incorporated

Very good diversification

The 3 months correlation between Franklin and Aflac is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and Aflac Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aflac Incorporated and Franklin Resources 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 Resources are associated (or correlated) with Aflac Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aflac Incorporated has no effect on the direction of Franklin Resources i.e., Franklin Resources and Aflac Incorporated go up and down completely randomly.

Pair Corralation between Franklin Resources and Aflac Incorporated

Considering the 90-day investment horizon Franklin Resources is expected to under-perform the Aflac Incorporated. In addition to that, Franklin Resources is 1.61 times more volatile than Aflac Incorporated. It trades about -0.11 of its total potential returns per unit of risk. Aflac Incorporated is currently generating about 0.16 per unit of volatility. If you would invest  7,920  in Aflac Incorporated on February 22, 2024 and sell it today you would earn a total of  846.00  from holding Aflac Incorporated or generate 10.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Franklin Resources  vs.  Aflac Incorporated

Franklin Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Aflac Incorporated

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aflac Incorporated are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Aflac Incorporated may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Franklin Resources and Aflac Incorporated

The main advantage of trading using opposite Franklin Resources and Aflac Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Resources position performs unexpectedly, Aflac Incorporated 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 Aflac Incorporated will offset losses from the drop in Aflac Incorporated's long position.

The idea behind Franklin Resources and Aflac Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.