Correlation Between Franklin Resources and Idemitsu Kosan

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

By analyzing existing cross correlation between Franklin Resources and Idemitsu Kosan CoLtd, you can compare the effects of market volatilities on Franklin Resources and Idemitsu Kosan 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 Idemitsu Kosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Resources and Idemitsu Kosan.

Diversification Opportunities for Franklin Resources and Idemitsu Kosan

-0.1

Correlation Coefficient

Franklin Resources  Idemitsu Kosan

Good diversification

The 3 months correlation between Franklin and Idemitsu is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and Idemitsu Kosan CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan CoLtd 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 Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan CoLtd has no effect on the direction of Franklin Resources i.e., Franklin Resources and Idemitsu Kosan go up and down completely randomly.

Pair Corralation between Franklin Resources and Idemitsu Kosan

Considering the 90-day investment horizon Franklin Resources is expected to generate 21.96 times less return on investment than Idemitsu Kosan. In addition to that, Franklin Resources is 1.05 times more volatile than Idemitsu Kosan CoLtd. It trades about 0.0 of its total potential returns per unit of risk. Idemitsu Kosan CoLtd is currently generating about 0.09 per unit of volatility. If you would invest  669.00  in Idemitsu Kosan CoLtd on December 20, 2024 and sell it today you would earn a total of  71.00  from holding Idemitsu Kosan CoLtd or generate 10.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Franklin Resources  vs.  Idemitsu Kosan CoLtd

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.

Idemitsu Kosan CoLtd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Idemitsu Kosan CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Idemitsu Kosan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin Resources and Idemitsu Kosan

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

The idea behind Franklin Resources and Idemitsu Kosan CoLtd 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.