Correlation Between Franklin Floating and Nordnet One

Can any of the company-specific risk be diversified away by investing in both Franklin Floating and Nordnet One 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 Nordnet One 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 Nordnet One Balansert, you can compare the effects of market volatilities on Franklin Floating and Nordnet One 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 Nordnet One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Floating and Nordnet One.

Diversification Opportunities for Franklin Floating and Nordnet One

0.8

Correlation Coefficient

Franklin Floating  Nordnet One

Very poor diversification

The 3 months correlation between Franklin and Nordnet is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Floating Rate and Nordnet One Balansert in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordnet One Balansert 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 Nordnet One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordnet One Balansert has no effect on the direction of Franklin Floating i.e., Franklin Floating and Nordnet One go up and down completely randomly.

Pair Corralation between Franklin Floating and Nordnet One

Assuming the 90 days trading horizon Franklin Floating is expected to generate 1.0 times less return on investment than Nordnet One. But when comparing it to its historical volatility, Franklin Floating Rate is 3.7 times less risky than Nordnet One. It trades about 0.27 of its potential returns per unit of risk. Nordnet One Balansert is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  13,577  in Nordnet One Balansert on October 10, 2024 and sell it today you would earn a total of  209.00  from holding Nordnet One Balansert or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Franklin Floating Rate  vs.  Nordnet One Balansert

Franklin Floating Rate

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Floating Rate are ranked lower than 21 (%) 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.

Nordnet One Balansert

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nordnet One Balansert are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable basic indicators, Nordnet One is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Franklin Floating and Nordnet One

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

The idea behind Franklin Floating Rate and Nordnet One Balansert 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.