Correlation Between Franklin Financial and Alpine Banks

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

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

Diversification Opportunities for Franklin Financial and Alpine Banks

0.44

Correlation Coefficient

Franklin Financial  Alpine Banks

Very weak diversification

The 3 months correlation between Franklin and Alpine is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Financial Services and Alpine Banks of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpine Banks and Franklin Financial 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 Financial Services are associated (or correlated) with Alpine Banks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpine Banks has no effect on the direction of Franklin Financial i.e., Franklin Financial and Alpine Banks go up and down completely randomly.

Pair Corralation between Franklin Financial and Alpine Banks

Given the investment horizon of 90 days Franklin Financial Services is expected to under-perform the Alpine Banks. In addition to that, Franklin Financial is 1.19 times more volatile than Alpine Banks of. It trades about -0.34 of its total potential returns per unit of risk. Alpine Banks of is currently generating about 0.45 per unit of volatility. If you would invest  2,974  in Alpine Banks of on October 6, 2024 and sell it today you would earn a total of  448.00  from holding Alpine Banks of or generate 15.06% return on investment over 90 days.

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

Franklin Financial Services  vs.  Alpine Banks of

Franklin Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Franklin Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Alpine Banks

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Banks of are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Alpine Banks sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Financial and Alpine Banks

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

The idea behind Franklin Financial Services and Alpine Banks of 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.