Correlation Between Franklin Responsibly and Simplify Exchange

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

By analyzing existing cross correlation between Franklin Responsibly Sourced and Simplify Exchange Traded, you can compare the effects of market volatilities on Franklin Responsibly and Simplify Exchange 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 Responsibly with a short position of Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Responsibly and Simplify Exchange.

Diversification Opportunities for Franklin Responsibly and Simplify Exchange

0.08

Correlation Coefficient

Franklin Responsibly  Simplify Exchange

Significant diversification

The 3 months correlation between Franklin and Simplify is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Responsibly Sourced and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded and Franklin Responsibly 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 Responsibly Sourced are associated (or correlated) with Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of Franklin Responsibly i.e., Franklin Responsibly and Simplify Exchange go up and down completely randomly.

Pair Corralation between Franklin Responsibly and Simplify Exchange

Given the investment horizon of 90 days Franklin Responsibly Sourced is expected to generate 0.42 times more return on investment than Simplify Exchange. However, Franklin Responsibly Sourced is 2.37 times less risky than Simplify Exchange. It trades about 0.01 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about -0.06 per unit of risk. If you would invest  3,556  in Franklin Responsibly Sourced on October 10, 2024 and sell it today you would earn a total of  1.00  from holding Franklin Responsibly Sourced or generate 0.03% return on investment over 90 days.

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

Franklin Responsibly Sourced  vs.  Simplify Exchange Traded

Franklin Responsibly

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Responsibly Sourced are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Franklin Responsibly is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Simplify Exchange Traded

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Simplify Exchange exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Responsibly and Simplify Exchange

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

The idea behind Franklin Responsibly Sourced and Simplify Exchange Traded 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.