Correlation Between Franklin Floating and KLP AksjeEuropa

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

By analyzing existing cross correlation between Franklin Floating Rate and KLP AksjeEuropa Indeks, you can compare the effects of market volatilities on Franklin Floating and KLP AksjeEuropa 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 Floating with a short position of KLP AksjeEuropa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Floating and KLP AksjeEuropa.

Diversification Opportunities for Franklin Floating and KLP AksjeEuropa

-0.27

Correlation Coefficient

Franklin Floating  KLP AksjeEuropa

Very good diversification

The 3 months correlation between Franklin and KLP is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Floating Rate and KLP AksjeEuropa Indeks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLP AksjeEuropa Indeks and Franklin Floating 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 Floating Rate are associated (or correlated) with KLP AksjeEuropa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLP AksjeEuropa Indeks has no effect on the direction of Franklin Floating i.e., Franklin Floating and KLP AksjeEuropa go up and down completely randomly.

Pair Corralation between Franklin Floating and KLP AksjeEuropa

Assuming the 90 days trading horizon Franklin Floating Rate is expected to generate 0.13 times more return on investment than KLP AksjeEuropa. However, Franklin Floating Rate is 7.78 times less risky than KLP AksjeEuropa. It trades about 0.45 of its potential returns per unit of risk. KLP AksjeEuropa Indeks is currently generating about 0.02 per unit of risk. If you would invest  1,810  in Franklin Floating Rate on September 16, 2024 and sell it today you would earn a total of  43.00  from holding Franklin Floating Rate or generate 2.38% return on investment over 90 days.

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

Franklin Floating Rate  vs.  KLP AksjeEuropa Indeks

Franklin Floating Rate

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Floating Rate are ranked lower than 35 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, Franklin Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KLP AksjeEuropa Indeks

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KLP AksjeEuropa Indeks are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, KLP AksjeEuropa 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 Floating and KLP AksjeEuropa

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

The idea behind Franklin Floating Rate and KLP AksjeEuropa Indeks 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.