Correlation Between Franklin Equity and Blackrock Acwi

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

By analyzing existing cross correlation between Franklin Equity Income and Blackrock Acwi Exus, you can compare the effects of market volatilities on Franklin Equity and Blackrock Acwi 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 Equity with a short position of Blackrock Acwi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Equity and Blackrock Acwi.

Diversification Opportunities for Franklin Equity and Blackrock Acwi

0.01

Correlation Coefficient

Franklin Equity  Blackrock Acwi

Significant diversification

The 3 months correlation between FRANKLIN and Blackrock is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Equity Income and Blackrock Acwi Exus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Acwi Exus and Franklin Equity 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 Equity Income are associated (or correlated) with Blackrock Acwi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Acwi Exus has no effect on the direction of Franklin Equity i.e., Franklin Equity and Blackrock Acwi go up and down completely randomly.

Pair Corralation between Franklin Equity and Blackrock Acwi

Assuming the 90 days horizon Franklin Equity Income is expected to under-perform the Blackrock Acwi. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Equity Income is 1.06 times less risky than Blackrock Acwi. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Blackrock Acwi Exus is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,019  in Blackrock Acwi Exus on December 23, 2024 and sell it today you would earn a total of  82.00  from holding Blackrock Acwi Exus or generate 8.05% return on investment over 90 days.

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

Franklin Equity Income  vs.  Blackrock Acwi Exus

Franklin Equity Income

Risk-Adjusted Performance

Very Weak

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

Blackrock Acwi Exus

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Acwi Exus are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock Acwi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin Equity and Blackrock Acwi

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

The idea behind Franklin Equity Income and Blackrock Acwi Exus 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.