Correlation Between Franklin Resources and Kinsale Capital

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

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

Diversification Opportunities for Franklin Resources and Kinsale Capital

0.73

Correlation Coefficient

Franklin Resources  Kinsale Capital

Poor diversification

The 3 months correlation between Franklin and Kinsale is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group 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 Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of Franklin Resources i.e., Franklin Resources and Kinsale Capital go up and down completely randomly.

Pair Corralation between Franklin Resources and Kinsale Capital

Considering the 90-day investment horizon Franklin Resources is expected to generate 1.11 times more return on investment than Kinsale Capital. However, Franklin Resources is 1.11 times more volatile than Kinsale Capital Group. It trades about -0.33 of its potential returns per unit of risk. Kinsale Capital Group is currently generating about -0.54 per unit of risk. If you would invest  2,156  in Franklin Resources on October 15, 2024 and sell it today you would lose (244.00) from holding Franklin Resources or give up 11.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Franklin Resources  vs.  Kinsale Capital Group

Franklin Resources

Risk-Adjusted Performance

0 of 100

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.

Kinsale Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinsale Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Franklin Resources and Kinsale Capital

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

The idea behind Franklin Resources and Kinsale Capital Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.