Correlation Between Franklin Adjustable and Snow Capital

Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable and Snow Capital 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 Snow Capital 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 Snow Capital Opportunity, you can compare the effects of market volatilities on Franklin Adjustable and Snow Capital 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 Snow Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Snow Capital.

Diversification Opportunities for Franklin Adjustable and Snow Capital

0.14

Correlation Coefficient

Franklin Adjustable  Snow Capital

Average diversification

The 3 months correlation between Franklin and Snow is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Snow Capital Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Capital Opportunity 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 Snow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Capital Opportunity has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Snow Capital go up and down completely randomly.

Pair Corralation between Franklin Adjustable and Snow Capital

Assuming the 90 days horizon Franklin Adjustable is expected to generate 4.51 times less return on investment than Snow Capital. But when comparing it to its historical volatility, Franklin Adjustable Government is 6.37 times less risky than Snow Capital. It trades about 0.21 of its potential returns per unit of risk. Snow Capital Opportunity is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,207  in Snow Capital Opportunity on December 20, 2024 and sell it today you would earn a total of  195.00  from holding Snow Capital Opportunity or generate 6.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Franklin Adjustable Government  vs.  Snow Capital Opportunity

Franklin Adjustable

Risk-Adjusted Performance

Solid

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

Snow Capital Opportunity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Snow Capital Opportunity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Snow Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin Adjustable and Snow Capital

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

The idea behind Franklin Adjustable Government and Snow Capital Opportunity 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.