Correlation Between Franklin and Research Portfolio

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

By analyzing existing cross correlation between Franklin Government Money and Research Portfolio Institutional, you can compare the effects of market volatilities on Franklin and Research Portfolio 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 with a short position of Research Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Research Portfolio.

Diversification Opportunities for Franklin and Research Portfolio

0.0

Correlation Coefficient

Franklin  Research Portfolio

Pay attention - limited upside

The 3 months correlation between Franklin and Research is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Research Portfolio Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Research Portfolio and Franklin 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 Government Money are associated (or correlated) with Research Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Research Portfolio has no effect on the direction of Franklin i.e., Franklin and Research Portfolio go up and down completely randomly.

Pair Corralation between Franklin and Research Portfolio

If you would invest  6,074  in Research Portfolio Institutional on October 9, 2024 and sell it today you would earn a total of  43.00  from holding Research Portfolio Institutional or generate 0.71% return on investment over 90 days.

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

Franklin Government Money  vs.  Research Portfolio Institution

Franklin Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Research Portfolio

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Research Portfolio Institutional are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Research Portfolio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Franklin and Research Portfolio

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

The idea behind Franklin Government Money and Research Portfolio Institutional 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.