Correlation Between Franklin Natural and Ivy International

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Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Ivy International 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 Natural and Ivy International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Natural Resources and Ivy International E, you can compare the effects of market volatilities on Franklin Natural and Ivy International 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 Natural with a short position of Ivy International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Ivy International.

Diversification Opportunities for Franklin Natural and Ivy International

FranklinIvyDiversified AwayFranklinIvyDiversified Away100%
-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Franklin and Ivy is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Ivy International E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy International and Franklin Natural 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 Natural Resources are associated (or correlated) with Ivy International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy International has no effect on the direction of Franklin Natural i.e., Franklin Natural and Ivy International go up and down completely randomly.

Pair Corralation between Franklin Natural and Ivy International

Assuming the 90 days horizon Franklin Natural Resources is expected to generate 1.16 times more return on investment than Ivy International. However, Franklin Natural is 1.16 times more volatile than Ivy International E. It trades about 0.02 of its potential returns per unit of risk. Ivy International E is currently generating about -0.02 per unit of risk. If you would invest  2,992  in Franklin Natural Resources on September 16, 2024 and sell it today you would earn a total of  21.00  from holding Franklin Natural Resources or generate 0.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Franklin Natural Resources  vs.  Ivy International E

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -4-20246810
JavaScript chart by amCharts 3.21.15FRNRX ICEIX
       Timeline  
Franklin Natural Res 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Natural Resources are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec30.53131.532
Ivy International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ivy International E has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ivy International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2121.52222.5

Franklin Natural and Ivy International Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.93-2.19-1.46-0.72-0.010.711.472.222.973.72 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15FRNRX ICEIX
       Returns  

Pair Trading with Franklin Natural and Ivy International

The main advantage of trading using opposite Franklin Natural and Ivy International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Ivy International 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 Ivy International will offset losses from the drop in Ivy International's long position.
The idea behind Franklin Natural Resources and Ivy International E 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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