Correlation Between Franklin Resources and International Media

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

By analyzing existing cross correlation between Franklin Resources and International Media Acquisition, you can compare the effects of market volatilities on Franklin Resources and International Media 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 International Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Resources and International Media.

Diversification Opportunities for Franklin Resources and International Media

-0.62

Correlation Coefficient

Franklin Resources  International Media

Excellent diversification

The 3 months correlation between Franklin and International is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and International Media Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Media 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 International Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Media has no effect on the direction of Franklin Resources i.e., Franklin Resources and International Media go up and down completely randomly.

Pair Corralation between Franklin Resources and International Media

Considering the 90-day investment horizon Franklin Resources is expected to under-perform the International Media. But the stock apears to be less risky and, when comparing its historical volatility, Franklin Resources is 1.01 times less risky than International Media. The stock trades about -0.13 of its potential returns per unit of risk. The International Media Acquisition is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,050  in International Media Acquisition on March 4, 2024 and sell it today you would earn a total of  161.00  from holding International Media Acquisition or generate 15.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Franklin Resources  vs.  International Media Acquisitio

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 inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

International Media

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Media Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, International Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Resources and International Media

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

The idea behind Franklin Resources and International Media Acquisition 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.