Correlation Between Franklin Government and Sgi Prudent

Can any of the company-specific risk be diversified away by investing in both Franklin Government and Sgi Prudent 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 Government and Sgi Prudent 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 Sgi Prudent Growth, you can compare the effects of market volatilities on Franklin Government and Sgi Prudent 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 Government with a short position of Sgi Prudent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Sgi Prudent.

Diversification Opportunities for Franklin Government and Sgi Prudent

0.0

Correlation Coefficient

Franklin Government  Sgi Prudent

Pay attention - limited upside

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

Pair Corralation between Franklin Government and Sgi Prudent

Assuming the 90 days horizon Franklin Government Money is expected to under-perform the Sgi Prudent. In addition to that, Franklin Government is 6.68 times more volatile than Sgi Prudent Growth. It trades about -0.03 of its total potential returns per unit of risk. Sgi Prudent Growth is currently generating about 0.06 per unit of volatility. If you would invest  957.00  in Sgi Prudent Growth on October 24, 2024 and sell it today you would earn a total of  149.00  from holding Sgi Prudent Growth or generate 15.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Franklin Government Money  vs.  Sgi Prudent Growth

Franklin Government Money

Risk-Adjusted Performance

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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 Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sgi Prudent Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sgi Prudent Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Sgi Prudent 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 Government and Sgi Prudent

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

The idea behind Franklin Government Money and Sgi Prudent Growth 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.