Correlation Between Franklin Growth and Nuveen Preferred
Can any of the company-specific risk be diversified away by investing in both Franklin Growth and Nuveen Preferred 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 Growth and Nuveen Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Growth Opportunities and Nuveen Preferred Securities, you can compare the effects of market volatilities on Franklin Growth and Nuveen Preferred 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 Growth with a short position of Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Nuveen Preferred.
Diversification Opportunities for Franklin Growth and Nuveen Preferred
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Nuveen is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and Nuveen Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred Sec and Franklin Growth 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 Growth Opportunities are associated (or correlated) with Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred Sec has no effect on the direction of Franklin Growth i.e., Franklin Growth and Nuveen Preferred go up and down completely randomly.
Pair Corralation between Franklin Growth and Nuveen Preferred
Assuming the 90 days horizon Franklin Growth Opportunities is expected to generate 5.59 times more return on investment than Nuveen Preferred. However, Franklin Growth is 5.59 times more volatile than Nuveen Preferred Securities. It trades about 0.13 of its potential returns per unit of risk. Nuveen Preferred Securities is currently generating about 0.08 per unit of risk. If you would invest 5,911 in Franklin Growth Opportunities on September 15, 2024 and sell it today you would earn a total of 480.00 from holding Franklin Growth Opportunities or generate 8.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Growth Opportunities vs. Nuveen Preferred Securities
Performance |
Timeline |
Franklin Growth Oppo |
Nuveen Preferred Sec |
Franklin Growth and Nuveen Preferred Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Growth and Nuveen Preferred
The main advantage of trading using opposite Franklin Growth and Nuveen Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth position performs unexpectedly, Nuveen Preferred 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 Nuveen Preferred will offset losses from the drop in Nuveen Preferred's long position.Franklin Growth vs. Franklin Mutual Beacon | Franklin Growth vs. Templeton Developing Markets | Franklin Growth vs. Franklin Mutual Global | Franklin Growth vs. Franklin Mutual Global |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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