Correlation Between Rbb Fund and Franklin Utilities

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

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

Diversification Opportunities for Rbb Fund and Franklin Utilities

0.82

Correlation Coefficient

Rbb Fund  Franklin Utilities

Very poor diversification

The 3 months correlation between Rbb and Franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Rbb Fund and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Rbb Fund 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 Rbb Fund are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Rbb Fund i.e., Rbb Fund and Franklin Utilities go up and down completely randomly.

Pair Corralation between Rbb Fund and Franklin Utilities

Assuming the 90 days horizon Rbb Fund is expected to generate 0.7 times more return on investment than Franklin Utilities. However, Rbb Fund is 1.42 times less risky than Franklin Utilities. It trades about 0.37 of its potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.18 per unit of risk. If you would invest  1,104  in Rbb Fund on March 2, 2024 and sell it today you would earn a total of  56.00  from holding Rbb Fund or generate 5.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Rbb Fund   vs.  Franklin Utilities Fund

Rbb Fund

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rbb Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rbb Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Utilities

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Utilities Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Franklin Utilities may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Rbb Fund and Franklin Utilities

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

The idea behind Rbb Fund and Franklin Utilities Fund 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.