Correlation Between Donegal Investment and Franklin Floating

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

By analyzing existing cross correlation between Donegal Investment Group and Franklin Floating Rate, you can compare the effects of market volatilities on Donegal Investment and Franklin Floating 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 Donegal Investment with a short position of Franklin Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Investment and Franklin Floating.

Diversification Opportunities for Donegal Investment and Franklin Floating

-0.35

Correlation Coefficient

Donegal Investment  Franklin Floating

Very good diversification

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

Pair Corralation between Donegal Investment and Franklin Floating

Assuming the 90 days trading horizon Donegal Investment Group is expected to generate 2574.88 times more return on investment than Franklin Floating. However, Donegal Investment is 2574.88 times more volatile than Franklin Floating Rate. It trades about 0.2 of its potential returns per unit of risk. Franklin Floating Rate is currently generating about 0.27 per unit of risk. If you would invest  1,660  in Donegal Investment Group on October 26, 2024 and sell it today you would lose (10.00) from holding Donegal Investment Group or give up 0.6% of portfolio value over 90 days.

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

Donegal Investment Group  vs.  Franklin Floating Rate

Donegal Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Donegal Investment Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Donegal Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Franklin Floating Rate

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Floating Rate are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Franklin Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Donegal Investment and Franklin Floating

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

The idea behind Donegal Investment Group and Franklin Floating Rate 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.