Correlation Between Alpine Dynamic and Franklin

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

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

Diversification Opportunities for Alpine Dynamic and Franklin

0.0

Correlation Coefficient

Alpine Dynamic  Franklin

Pay attention - limited upside

The 3 months correlation between Alpine and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Dynamic Dividend and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money and Alpine Dynamic 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 Alpine Dynamic Dividend are associated (or correlated) with Franklin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of Alpine Dynamic i.e., Alpine Dynamic and Franklin go up and down completely randomly.

Pair Corralation between Alpine Dynamic and Franklin

Assuming the 90 days horizon Alpine Dynamic Dividend is expected to generate 5.34 times more return on investment than Franklin. However, Alpine Dynamic is 5.34 times more volatile than Franklin Government Money. It trades about 0.05 of its potential returns per unit of risk. Franklin Government Money is currently generating about 0.13 per unit of risk. If you would invest  423.00  in Alpine Dynamic Dividend on October 25, 2024 and sell it today you would earn a total of  17.00  from holding Alpine Dynamic Dividend or generate 4.02% return on investment over 90 days.

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

Alpine Dynamic Dividend  vs.  Franklin Government Money

Alpine Dynamic Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpine Dynamic Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Alpine Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpine Dynamic and Franklin

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

The idea behind Alpine Dynamic Dividend and Franklin Government Money 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.