Correlation Between Franklin Disruptive and Guinness Atkinson

Can any of the company-specific risk be diversified away by investing in both Franklin Disruptive and Guinness Atkinson 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 Guinness Atkinson 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 Guinness Atkinson Asset, you can compare the effects of market volatilities on Franklin Disruptive and Guinness Atkinson 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 Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Disruptive and Guinness Atkinson.

Diversification Opportunities for Franklin Disruptive and Guinness Atkinson

0.62

Correlation Coefficient

Franklin Disruptive  Guinness Atkinson

Poor diversification

The 3 months correlation between Franklin and Guinness is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Disruptive Commerce and Guinness Atkinson Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Asset 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 Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Asset has no effect on the direction of Franklin Disruptive i.e., Franklin Disruptive and Guinness Atkinson go up and down completely randomly.

Pair Corralation between Franklin Disruptive and Guinness Atkinson

If you would invest  3,712  in Franklin Disruptive Commerce on September 17, 2024 and sell it today you would earn a total of  177.00  from holding Franklin Disruptive Commerce or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

Franklin Disruptive Commerce  vs.  Guinness Atkinson Asset

Franklin Disruptive

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Disruptive Commerce are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Franklin Disruptive showed solid returns over the last few months and may actually be approaching a breakup point.

Guinness Atkinson Asset

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Guinness Atkinson Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unfluctuating basic indicators, Guinness Atkinson may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Franklin Disruptive and Guinness Atkinson

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

The idea behind Franklin Disruptive Commerce and Guinness Atkinson Asset 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.