Correlation Between Franklin Oregon and Nationwide Mid

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

By analyzing existing cross correlation between Franklin Oregon Tax Free and Nationwide Mid Cap, you can compare the effects of market volatilities on Franklin Oregon and Nationwide Mid 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 Oregon with a short position of Nationwide Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Oregon and Nationwide Mid.

Diversification Opportunities for Franklin Oregon and Nationwide Mid

0.05

Correlation Coefficient

Franklin Oregon  Nationwide Mid

Significant diversification

The 3 months correlation between Franklin and Nationwide is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Oregon Tax Free and Nationwide Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Mid Cap and Franklin Oregon 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 Oregon Tax Free are associated (or correlated) with Nationwide Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Mid Cap has no effect on the direction of Franklin Oregon i.e., Franklin Oregon and Nationwide Mid go up and down completely randomly.

Pair Corralation between Franklin Oregon and Nationwide Mid

Assuming the 90 days horizon Franklin Oregon is expected to generate 26.79 times less return on investment than Nationwide Mid. But when comparing it to its historical volatility, Franklin Oregon Tax Free is 4.01 times less risky than Nationwide Mid. It trades about 0.03 of its potential returns per unit of risk. Nationwide Mid Cap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,733  in Nationwide Mid Cap on September 12, 2024 and sell it today you would earn a total of  186.00  from holding Nationwide Mid Cap or generate 10.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Franklin Oregon Tax Free  vs.  Nationwide Mid Cap

Franklin Oregon Tax

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Oregon Tax Free are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Oregon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Mid Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Mid Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Nationwide Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Franklin Oregon and Nationwide Mid

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

The idea behind Franklin Oregon Tax Free and Nationwide Mid Cap 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.