Correlation Between Franklin Moderate and Upright Assets

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

By analyzing existing cross correlation between Franklin Moderate Allocation and Upright Assets Allocation, you can compare the effects of market volatilities on Franklin Moderate and Upright Assets 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 Moderate with a short position of Upright Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Upright Assets.

Diversification Opportunities for Franklin Moderate and Upright Assets

0.63

Correlation Coefficient

Franklin Moderate  Upright Assets

Poor diversification

The 3 months correlation between Franklin and Upright is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Upright Assets Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upright Assets Allocation and Franklin Moderate 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 Moderate Allocation are associated (or correlated) with Upright Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upright Assets Allocation has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Upright Assets go up and down completely randomly.

Pair Corralation between Franklin Moderate and Upright Assets

Assuming the 90 days horizon Franklin Moderate Allocation is expected to generate 0.28 times more return on investment than Upright Assets. However, Franklin Moderate Allocation is 3.55 times less risky than Upright Assets. It trades about -0.3 of its potential returns per unit of risk. Upright Assets Allocation is currently generating about -0.09 per unit of risk. If you would invest  1,642  in Franklin Moderate Allocation on October 7, 2024 and sell it today you would lose (60.00) from holding Franklin Moderate Allocation or give up 3.65% of portfolio value over 90 days.

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

Franklin Moderate Allocation  vs.  Upright Assets Allocation

Franklin Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Upright Assets Allocation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Upright Assets Allocation are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Upright Assets may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Franklin Moderate and Upright Assets

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

The idea behind Franklin Moderate Allocation and Upright Assets Allocation 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.