Correlation Between Franklin Resources and State Street

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

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

Diversification Opportunities for Franklin Resources and State Street

0.2

Correlation Coefficient

Franklin Resources  State Street

Modest diversification

The 3 months correlation between Franklin and State is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of Franklin Resources i.e., Franklin Resources and State Street go up and down completely randomly.

Pair Corralation between Franklin Resources and State Street

Considering the 90-day investment horizon Franklin Resources is expected to under-perform the State Street. In addition to that, Franklin Resources is 1.51 times more volatile than State Street Corp. It trades about -0.06 of its total potential returns per unit of risk. State Street Corp is currently generating about 0.03 per unit of volatility. If you would invest  9,727  in State Street Corp on December 1, 2024 and sell it today you would earn a total of  196.00  from holding State Street Corp or generate 2.02% return on investment over 90 days.

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

Franklin Resources  vs.  State Street Corp

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 latest conflicting performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

State Street Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, State Street is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Franklin Resources and State Street

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

The idea behind Franklin Resources and State Street Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..