Correlation Between Franklin New and Ab High
Can any of the company-specific risk be diversified away by investing in both Franklin New and Ab High 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 New and Ab High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin New York and Ab High Income, you can compare the effects of market volatilities on Franklin New and Ab High 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 New with a short position of Ab High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin New and Ab High.
Diversification Opportunities for Franklin New and Ab High
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and AGDAX is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Franklin New York and Ab High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab High Income and Franklin New 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 New York are associated (or correlated) with Ab High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab High Income has no effect on the direction of Franklin New i.e., Franklin New and Ab High go up and down completely randomly.
Pair Corralation between Franklin New and Ab High
Assuming the 90 days horizon Franklin New is expected to generate 3.56 times less return on investment than Ab High. But when comparing it to its historical volatility, Franklin New York is 1.39 times less risky than Ab High. It trades about 0.07 of its potential returns per unit of risk. Ab High Income is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 600.00 in Ab High Income on September 13, 2024 and sell it today you would earn a total of 108.00 from holding Ab High Income or generate 18.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin New York vs. Ab High Income
Performance |
Timeline |
Franklin New York |
Ab High Income |
Franklin New and Ab High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin New and Ab High
The main advantage of trading using opposite Franklin New and Ab High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin New position performs unexpectedly, Ab High 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 Ab High will offset losses from the drop in Ab High's long position.Franklin New vs. Ab High Income | Franklin New vs. Franklin High Income | Franklin New vs. Us High Relative | Franklin New vs. Fa 529 Aggressive |
Ab High vs. Absolute Convertible Arbitrage | Ab High vs. Gabelli Convertible And | Ab High vs. Advent Claymore Convertible | Ab High vs. Allianzgi Convertible Income |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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