Correlation Between American Funds and Ftfa-franklin Templeton
Can any of the company-specific risk be diversified away by investing in both American Funds and Ftfa-franklin Templeton 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 American Funds and Ftfa-franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds The and Ftfa Franklin Templeton Growth, you can compare the effects of market volatilities on American Funds and Ftfa-franklin Templeton 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 American Funds with a short position of Ftfa-franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Ftfa-franklin Templeton.
Diversification Opportunities for American Funds and Ftfa-franklin Templeton
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Ftfa-franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Ftfa Franklin Templeton Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ftfa Franklin Templeton and American Funds 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 American Funds The are associated (or correlated) with Ftfa-franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ftfa Franklin Templeton has no effect on the direction of American Funds i.e., American Funds and Ftfa-franklin Templeton go up and down completely randomly.
Pair Corralation between American Funds and Ftfa-franklin Templeton
Assuming the 90 days horizon American Funds The is expected to generate 0.8 times more return on investment than Ftfa-franklin Templeton. However, American Funds The is 1.26 times less risky than Ftfa-franklin Templeton. It trades about 0.08 of its potential returns per unit of risk. Ftfa Franklin Templeton Growth is currently generating about -0.02 per unit of risk. If you would invest 2,516 in American Funds The on December 1, 2024 and sell it today you would earn a total of 60.00 from holding American Funds The or generate 2.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Funds The vs. Ftfa Franklin Templeton Growth
Performance |
Timeline |
American Funds |
Ftfa Franklin Templeton |
American Funds and Ftfa-franklin Templeton Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Funds and Ftfa-franklin Templeton
The main advantage of trading using opposite American Funds and Ftfa-franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Ftfa-franklin Templeton 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 Ftfa-franklin Templeton will offset losses from the drop in Ftfa-franklin Templeton's long position.American Funds vs. T Rowe Price | American Funds vs. Intal High Relative | American Funds vs. Glg Intl Small | American Funds vs. Scharf Global Opportunity |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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