Correlation Between Alps/alerian Energy and Franklin Growth

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

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

Diversification Opportunities for Alps/alerian Energy and Franklin Growth

0.43

Correlation Coefficient

Alps/alerian Energy  Franklin Growth

Very weak diversification

The 3 months correlation between Alps/alerian and Franklin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Alpsalerian Energy Infrastruct and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth and Alps/alerian Energy 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 Alpsalerian Energy Infrastructure are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth has no effect on the direction of Alps/alerian Energy i.e., Alps/alerian Energy and Franklin Growth go up and down completely randomly.

Pair Corralation between Alps/alerian Energy and Franklin Growth

Assuming the 90 days horizon Alpsalerian Energy Infrastructure is expected to generate 0.64 times more return on investment than Franklin Growth. However, Alpsalerian Energy Infrastructure is 1.56 times less risky than Franklin Growth. It trades about 0.04 of its potential returns per unit of risk. Franklin Growth Fund is currently generating about -0.31 per unit of risk. If you would invest  1,441  in Alpsalerian Energy Infrastructure on October 10, 2024 and sell it today you would earn a total of  12.00  from holding Alpsalerian Energy Infrastructure or generate 0.83% return on investment over 90 days.

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

Alpsalerian Energy Infrastruct  vs.  Franklin Growth Fund

Alps/alerian Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alpsalerian Energy Infrastructure are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Alps/alerian Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Alps/alerian Energy and Franklin Growth

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

The idea behind Alpsalerian Energy Infrastructure and Franklin Growth 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 Commodity Directory module to find actively traded commodities issued by global exchanges.