Correlation Between Franklin Floating and Nordnet Teknologi

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

Diversification Opportunities for Franklin Floating and Nordnet Teknologi

0.64

Correlation Coefficient

Franklin Floating  Nordnet Teknologi

Poor diversification

The 3 months correlation between Franklin and Nordnet is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Floating Rate and Nordnet Teknologi Indeks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordnet Teknologi 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 Nordnet Teknologi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordnet Teknologi Indeks has no effect on the direction of Franklin Floating i.e., Franklin Floating and Nordnet Teknologi go up and down completely randomly.

Pair Corralation between Franklin Floating and Nordnet Teknologi

Assuming the 90 days trading horizon Franklin Floating Rate is expected to generate 0.07 times more return on investment than Nordnet Teknologi. However, Franklin Floating Rate is 13.99 times less risky than Nordnet Teknologi. It trades about -0.01 of its potential returns per unit of risk. Nordnet Teknologi Indeks is currently generating about -0.17 per unit of risk. If you would invest  1,602  in Franklin Floating Rate on December 29, 2024 and sell it today you would lose (1.00) from holding Franklin Floating Rate or give up 0.06% of portfolio value over 90 days.

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

Franklin Floating Rate  vs.  Nordnet Teknologi Indeks

Franklin Floating Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Floating Rate has generated negative risk-adjusted returns adding no value to fund investors. 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 Teknologi Indeks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordnet Teknologi Indeks has generated negative risk-adjusted returns adding no value to fund investors. In spite of inconsistent performance in the last few months, the Fund's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the fund investors.

Pair Trading with Franklin Floating and Nordnet Teknologi

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

The idea behind Franklin Floating Rate and Nordnet Teknologi 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.