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

0.33

Correlation Coefficient

Donegal Investment  Franklin Floating

Weak diversification

The 3 months correlation between Donegal and Franklin is 0.33. 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 is expected to generate 66.33 times less return on investment than Franklin Floating. In addition to that, Donegal Investment is 2.52 times more volatile than Franklin Floating Rate. It trades about 0.0 of its total potential returns per unit of risk. Franklin Floating Rate is currently generating about 0.21 per unit of volatility. If you would invest  1,583  in Franklin Floating Rate on October 11, 2024 and sell it today you would earn a total of  19.00  from holding Franklin Floating Rate or generate 1.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Donegal Investment Group  vs.  Franklin Floating Rate

Donegal Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Donegal Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Donegal Investment is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Franklin Floating Rate

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Floating Rate are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.