Correlation Between Franklin Disruptive and Franklin Genomic

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

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

Diversification Opportunities for Franklin Disruptive and Franklin Genomic

-0.35

Correlation Coefficient

Franklin Disruptive  Franklin Genomic

Very good diversification

The 3 months correlation between Franklin and Franklin is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Disruptive Commerce and Franklin Genomic Advancements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Genomic Adv and Franklin Disruptive 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 Disruptive Commerce are associated (or correlated) with Franklin Genomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Genomic Adv has no effect on the direction of Franklin Disruptive i.e., Franklin Disruptive and Franklin Genomic go up and down completely randomly.

Pair Corralation between Franklin Disruptive and Franklin Genomic

Given the investment horizon of 90 days Franklin Disruptive Commerce is expected to generate 0.69 times more return on investment than Franklin Genomic. However, Franklin Disruptive Commerce is 1.45 times less risky than Franklin Genomic. It trades about 0.05 of its potential returns per unit of risk. Franklin Genomic Advancements is currently generating about -0.1 per unit of risk. If you would invest  3,700  in Franklin Disruptive Commerce on October 9, 2024 and sell it today you would earn a total of  73.00  from holding Franklin Disruptive Commerce or generate 1.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Franklin Disruptive Commerce  vs.  Franklin Genomic Advancements

Franklin Disruptive

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Disruptive Commerce are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Franklin Disruptive may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Franklin Genomic Adv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Genomic Advancements has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Franklin Genomic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Disruptive and Franklin Genomic

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

The idea behind Franklin Disruptive Commerce and Franklin Genomic Advancements 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.