Correlation Between Franklin Floating and Bank of Ireland

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

Diversification Opportunities for Franklin Floating and Bank of Ireland

-0.88

Correlation Coefficient

Franklin Floating  Bank of Ireland

Pay attention - limited upside

The 3 months correlation between Franklin and Bank is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Floating Rate and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of Franklin Floating i.e., Franklin Floating and Bank of Ireland go up and down completely randomly.

Pair Corralation between Franklin Floating and Bank of Ireland

Assuming the 90 days trading horizon Franklin Floating Rate is expected to generate 0.04 times more return on investment than Bank of Ireland. However, Franklin Floating Rate is 22.53 times less risky than Bank of Ireland. It trades about 0.4 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.14 per unit of risk. If you would invest  1,564  in Franklin Floating Rate on September 4, 2024 and sell it today you would earn a total of  35.00  from holding Franklin Floating Rate or generate 2.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Franklin Floating Rate  vs.  Bank of Ireland

Franklin Floating Rate

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Floating Rate are ranked lower than 31 (%) 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.

Bank of Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Ireland has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Franklin Floating and Bank of Ireland

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

The idea behind Franklin Floating Rate and Bank of Ireland 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.