Correlation Between Dynamic Active and Franklin Bissett

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

By analyzing existing cross correlation between Dynamic Active Dividend and Franklin Bissett Corporate, you can compare the effects of market volatilities on Dynamic Active and Franklin Bissett 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 Dynamic Active with a short position of Franklin Bissett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Active and Franklin Bissett.

Diversification Opportunities for Dynamic Active and Franklin Bissett

0.41

Correlation Coefficient

Dynamic Active  Franklin Bissett

Very weak diversification

The 3 months correlation between Dynamic and Franklin is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Active Dividend and Franklin Bissett Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Bissett Cor and Dynamic Active 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 Dynamic Active Dividend are associated (or correlated) with Franklin Bissett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Bissett Cor has no effect on the direction of Dynamic Active i.e., Dynamic Active and Franklin Bissett go up and down completely randomly.

Pair Corralation between Dynamic Active and Franklin Bissett

Assuming the 90 days trading horizon Dynamic Active Dividend is expected to generate 3.39 times more return on investment than Franklin Bissett. However, Dynamic Active is 3.39 times more volatile than Franklin Bissett Corporate. It trades about 0.26 of its potential returns per unit of risk. Franklin Bissett Corporate is currently generating about 0.14 per unit of risk. If you would invest  5,551  in Dynamic Active Dividend on September 4, 2024 and sell it today you would earn a total of  941.00  from holding Dynamic Active Dividend or generate 16.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dynamic Active Dividend  vs.  Franklin Bissett Corporate

Dynamic Active Dividend

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Dividend are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dynamic Active displayed solid returns over the last few months and may actually be approaching a breakup point.

Franklin Bissett Cor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Bissett Corporate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Franklin Bissett is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dynamic Active and Franklin Bissett

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

The idea behind Dynamic Active Dividend and Franklin Bissett Corporate 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.