Correlation Between Franklin New and Baron Health
Can any of the company-specific risk be diversified away by investing in both Franklin New and Baron Health 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 New and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin New York and Baron Health Care, you can compare the effects of market volatilities on Franklin New and Baron Health 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 New with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin New and Baron Health.
Diversification Opportunities for Franklin New and Baron Health
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Baron is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Franklin New York and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care and Franklin New 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 New York are associated (or correlated) with Baron Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Franklin New i.e., Franklin New and Baron Health go up and down completely randomly.
Pair Corralation between Franklin New and Baron Health
Assuming the 90 days horizon Franklin New is expected to generate 591.0 times less return on investment than Baron Health. But when comparing it to its historical volatility, Franklin New York is 4.64 times less risky than Baron Health. It trades about 0.0 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,948 in Baron Health Care on October 23, 2024 and sell it today you would earn a total of 20.00 from holding Baron Health Care or generate 1.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin New York vs. Baron Health Care
Performance |
Timeline |
Franklin New York |
Baron Health Care |
Franklin New and Baron Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin New and Baron Health
The main advantage of trading using opposite Franklin New and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin New position performs unexpectedly, Baron Health 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 Baron Health will offset losses from the drop in Baron Health's long position.Franklin New vs. Jennison Natural Resources | Franklin New vs. Vanguard Energy Index | Franklin New vs. Alpsalerian Energy Infrastructure | Franklin New vs. Franklin Natural Resources |
Baron Health vs. Qs Large Cap | Baron Health vs. Touchstone Large Cap | Baron Health vs. Tax Managed Large Cap | Baron Health vs. Qs Large Cap |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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