Correlation Between Franklin Federal and Alpsred Rocks

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

By analyzing existing cross correlation between Franklin Federal Limited Term and Alpsred Rocks Listed, you can compare the effects of market volatilities on Franklin Federal and Alpsred Rocks 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 Federal with a short position of Alpsred Rocks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Alpsred Rocks.

Diversification Opportunities for Franklin Federal and Alpsred Rocks

0.33

Correlation Coefficient

Franklin Federal  Alpsred Rocks

Weak diversification

The 3 months correlation between Franklin and Alpsred is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Alpsred Rocks Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpsred Rocks Listed and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Alpsred Rocks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpsred Rocks Listed has no effect on the direction of Franklin Federal i.e., Franklin Federal and Alpsred Rocks go up and down completely randomly.

Pair Corralation between Franklin Federal and Alpsred Rocks

Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.06 times more return on investment than Alpsred Rocks. However, Franklin Federal Limited Term is 17.71 times less risky than Alpsred Rocks. It trades about 0.09 of its potential returns per unit of risk. Alpsred Rocks Listed is currently generating about -0.05 per unit of risk. If you would invest  1,029  in Franklin Federal Limited Term on September 12, 2024 and sell it today you would earn a total of  6.00  from holding Franklin Federal Limited Term or generate 0.58% return on investment over 90 days.

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

Franklin Federal Limited Term  vs.  Alpsred Rocks Listed

Franklin Federal Lim

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Federal Limited Term are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Federal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alpsred Rocks Listed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Franklin Federal and Alpsred Rocks

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

The idea behind Franklin Federal Limited Term and Alpsred Rocks Listed 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.