Correlation Between Franklin Adjustable and Strategic Advisers

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

Diversification Opportunities for Franklin Adjustable and Strategic Advisers

0.92

Correlation Coefficient

Franklin Adjustable  Strategic Advisers

Almost no diversification

The 3 months correlation between Franklin and Strategic is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Strategic Advisers E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Advisers 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 Strategic Advisers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Advisers has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Strategic Advisers go up and down completely randomly.

Pair Corralation between Franklin Adjustable and Strategic Advisers

Assuming the 90 days horizon Franklin Adjustable is expected to generate 1.44 times less return on investment than Strategic Advisers. But when comparing it to its historical volatility, Franklin Adjustable Government is 2.88 times less risky than Strategic Advisers. It trades about 0.23 of its potential returns per unit of risk. Strategic Advisers E is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  889.00  in Strategic Advisers E on December 28, 2024 and sell it today you would earn a total of  19.00  from holding Strategic Advisers E or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Franklin Adjustable Government  vs.  Strategic Advisers E

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 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Adjustable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Strategic Advisers

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Advisers E are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Strategic Advisers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Adjustable and Strategic Advisers

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

The idea behind Franklin Adjustable Government and Strategic Advisers E 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.