Correlation Between Alpine Banks and Franklin Credit

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

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

Diversification Opportunities for Alpine Banks and Franklin Credit

0.24

Correlation Coefficient

Alpine Banks  Franklin Credit

Modest diversification

The 3 months correlation between Alpine and Franklin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Banks of and Franklin Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Credit Mana and Alpine Banks 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 Banks of are associated (or correlated) with Franklin Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Credit Mana has no effect on the direction of Alpine Banks i.e., Alpine Banks and Franklin Credit go up and down completely randomly.

Pair Corralation between Alpine Banks and Franklin Credit

Assuming the 90 days horizon Alpine Banks of is expected to generate 0.2 times more return on investment than Franklin Credit. However, Alpine Banks of is 5.09 times less risky than Franklin Credit. It trades about 0.44 of its potential returns per unit of risk. Franklin Credit Management is currently generating about -0.08 per unit of risk. If you would invest  2,973  in Alpine Banks of on September 23, 2024 and sell it today you would earn a total of  451.00  from holding Alpine Banks of or generate 15.17% return on investment over 90 days.

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

Alpine Banks of  vs.  Franklin Credit Management

Alpine Banks

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Banks of are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, Alpine Banks sustained solid returns over the last few months and may actually be approaching a breakup point.

Franklin Credit Mana

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Credit Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Franklin Credit displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpine Banks and Franklin Credit

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

The idea behind Alpine Banks of and Franklin Credit Management 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.