Correlation Between Franklin Adjustable and Alger Dynamic

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Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable and Alger Dynamic 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 Adjustable and Alger Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Adjustable Government and Alger Dynamic Opportunities, you can compare the effects of market volatilities on Franklin Adjustable and Alger Dynamic 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 Adjustable with a short position of Alger Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Alger Dynamic.

Diversification Opportunities for Franklin Adjustable and Alger Dynamic

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Franklin and Alger is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Alger Dynamic Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Dynamic Opport and Franklin Adjustable 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 Adjustable Government are associated (or correlated) with Alger Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Dynamic Opport has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Alger Dynamic go up and down completely randomly.

Pair Corralation between Franklin Adjustable and Alger Dynamic

Assuming the 90 days horizon Franklin Adjustable Government is not expected to generate positive returns. However, Franklin Adjustable Government is 11.01 times less risky than Alger Dynamic. It waists most of its returns potential to compensate for thr risk taken. Alger Dynamic is generating about 0.17 per unit of risk. If you would invest  2,065  in Alger Dynamic Opportunities on October 8, 2024 and sell it today you would earn a total of  181.00  from holding Alger Dynamic Opportunities or generate 8.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Franklin Adjustable Government  vs.  Alger Dynamic Opportunities

 Performance 
       Timeline  
Franklin Adjustable 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Franklin Adjustable Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Franklin Adjustable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Alger Dynamic Opport 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Alger Dynamic Opportunities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Dynamic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Franklin Adjustable and Alger Dynamic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Adjustable and Alger Dynamic

The main advantage of trading using opposite Franklin Adjustable and Alger Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Adjustable position performs unexpectedly, Alger Dynamic 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 Alger Dynamic will offset losses from the drop in Alger Dynamic's long position.
The idea behind Franklin Adjustable Government and Alger Dynamic Opportunities 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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