Correlation Between Franklin Natural and Kensington Active
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Kensington Active 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 Kensington Active 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 Kensington Active Advantage, you can compare the effects of market volatilities on Franklin Natural and Kensington Active 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 Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Kensington Active.
Diversification Opportunities for Franklin Natural and Kensington Active
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Kensington is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active 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 Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Franklin Natural i.e., Franklin Natural and Kensington Active go up and down completely randomly.
Pair Corralation between Franklin Natural and Kensington Active
Assuming the 90 days horizon Franklin Natural is expected to generate 19.43 times less return on investment than Kensington Active. In addition to that, Franklin Natural is 2.25 times more volatile than Kensington Active Advantage. It trades about 0.0 of its total potential returns per unit of risk. Kensington Active Advantage is currently generating about 0.1 per unit of volatility. If you would invest 904.00 in Kensington Active Advantage on September 23, 2024 and sell it today you would earn a total of 113.00 from holding Kensington Active Advantage or generate 12.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Natural Resources vs. Kensington Active Advantage
Performance |
Timeline |
Franklin Natural Res |
Kensington Active |
Franklin Natural and Kensington Active Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Natural and Kensington Active
The main advantage of trading using opposite Franklin Natural and Kensington Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Kensington Active 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 Kensington Active will offset losses from the drop in Kensington Active's long position.Franklin Natural vs. Prudential Government Money | Franklin Natural vs. Dws Government Money | Franklin Natural vs. Ab Government Exchange | Franklin Natural vs. Edward Jones Money |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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