Correlation Between Franklin Adjustable and Oak Ridge

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

Diversification Opportunities for Franklin Adjustable and Oak Ridge

-0.1

Correlation Coefficient

Franklin Adjustable  Oak Ridge

Good diversification

The 3 months correlation between Franklin and Oak is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Oak Ridge Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge Small 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 Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Small has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Oak Ridge go up and down completely randomly.

Pair Corralation between Franklin Adjustable and Oak Ridge

Assuming the 90 days horizon Franklin Adjustable Government is expected to under-perform the Oak Ridge. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Adjustable Government is 20.35 times less risky than Oak Ridge. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Oak Ridge Small is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,068  in Oak Ridge Small on September 4, 2024 and sell it today you would earn a total of  108.00  from holding Oak Ridge Small or generate 10.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Franklin Adjustable Government  vs.  Oak Ridge Small

Franklin Adjustable

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Adjustable Government are ranked lower than 1 (%) 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.

Oak Ridge Small

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Small are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oak Ridge showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Adjustable and Oak Ridge

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

The idea behind Franklin Adjustable Government and Oak Ridge Small 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.