Correlation Between Franklin Resources and Ngx Energy

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

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

Diversification Opportunities for Franklin Resources and Ngx Energy

0.21

Correlation Coefficient

Franklin Resources  Ngx Energy

Modest diversification

The 3 months correlation between Franklin and Ngx is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and Ngx Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngx Energy International and Franklin Resources 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 Resources are associated (or correlated) with Ngx Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngx Energy International has no effect on the direction of Franklin Resources i.e., Franklin Resources and Ngx Energy go up and down completely randomly.

Pair Corralation between Franklin Resources and Ngx Energy

Considering the 90-day investment horizon Franklin Resources is expected to generate 0.65 times more return on investment than Ngx Energy. However, Franklin Resources is 1.54 times less risky than Ngx Energy. It trades about 0.01 of its potential returns per unit of risk. Ngx Energy International is currently generating about -0.09 per unit of risk. If you would invest  2,017  in Franklin Resources on December 20, 2024 and sell it today you would lose (9.00) from holding Franklin Resources or give up 0.45% of portfolio value over 90 days.

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

Franklin Resources  vs.  Ngx Energy International

Franklin Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Franklin Resources is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Ngx Energy International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ngx Energy International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Franklin Resources and Ngx Energy

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

The idea behind Franklin Resources and Ngx Energy International 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.