Correlation Between Franklin Credit and SUMILF

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

By analyzing existing cross correlation between Franklin Credit Management and SUMILF 3375 15 APR 81, you can compare the effects of market volatilities on Franklin Credit and SUMILF 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 Credit with a short position of SUMILF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Credit and SUMILF.

Diversification Opportunities for Franklin Credit and SUMILF

-0.11

Correlation Coefficient

Franklin Credit  SUMILF

Good diversification

The 3 months correlation between Franklin and SUMILF is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Credit Management and SUMILF 3375 15 APR 81 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMILF 3375 15 and Franklin Credit 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 Credit Management are associated (or correlated) with SUMILF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMILF 3375 15 has no effect on the direction of Franklin Credit i.e., Franklin Credit and SUMILF go up and down completely randomly.

Pair Corralation between Franklin Credit and SUMILF

Given the investment horizon of 90 days Franklin Credit Management is expected to generate 35.82 times more return on investment than SUMILF. However, Franklin Credit is 35.82 times more volatile than SUMILF 3375 15 APR 81. It trades about 0.06 of its potential returns per unit of risk. SUMILF 3375 15 APR 81 is currently generating about 0.48 per unit of risk. If you would invest  11.00  in Franklin Credit Management on December 2, 2024 and sell it today you would lose (1.00) from holding Franklin Credit Management or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	8.2%
Values	Daily Returns

Franklin Credit Management  vs.  SUMILF 3375 15 APR 81

Franklin Credit Mana

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Credit Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Franklin Credit displayed solid returns over the last few months and may actually be approaching a breakup point.

SUMILF 3375 15

Risk-Adjusted Performance

Very Strong

Over the last 90 days SUMILF 3375 15 APR 81 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unfluctuating basic indicators, SUMILF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin Credit and SUMILF

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

The idea behind Franklin Credit Management and SUMILF 3375 15 APR 81 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..