Correlation Between Franklin Government and Steward Ered
Can any of the company-specific risk be diversified away by investing in both Franklin Government and Steward Ered 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 Government and Steward Ered into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Government Money and Steward Ered Call, you can compare the effects of market volatilities on Franklin Government and Steward Ered 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 Government with a short position of Steward Ered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Steward Ered.
Diversification Opportunities for Franklin Government and Steward Ered
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Steward is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Steward Ered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Ered Call and Franklin Government 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 Government Money are associated (or correlated) with Steward Ered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Ered Call has no effect on the direction of Franklin Government i.e., Franklin Government and Steward Ered go up and down completely randomly.
Pair Corralation between Franklin Government and Steward Ered
Assuming the 90 days horizon Franklin Government is expected to generate 4.3 times less return on investment than Steward Ered. But when comparing it to its historical volatility, Franklin Government Money is 3.23 times less risky than Steward Ered. It trades about 0.13 of its potential returns per unit of risk. Steward Ered Call is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 823.00 in Steward Ered Call on September 14, 2024 and sell it today you would earn a total of 36.00 from holding Steward Ered Call or generate 4.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Government Money vs. Steward Ered Call
Performance |
Timeline |
Franklin Government Money |
Steward Ered Call |
Franklin Government and Steward Ered Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Government and Steward Ered
The main advantage of trading using opposite Franklin Government and Steward Ered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, Steward Ered 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 Steward Ered will offset losses from the drop in Steward Ered's long position.Franklin Government vs. Cmg Ultra Short | Franklin Government vs. Virtus Multi Sector Short | Franklin Government vs. Prudential Short Duration | Franklin Government vs. Siit Ultra Short |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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