Correlation Between Nasdaq and Franklin New

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

By analyzing existing cross correlation between Nasdaq Inc and Franklin New York, you can compare the effects of market volatilities on Nasdaq and Franklin New 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 Nasdaq with a short position of Franklin New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Franklin New.

Diversification Opportunities for Nasdaq and Franklin New

0.05

Correlation Coefficient

Nasdaq  Franklin New

Significant diversification

The 3 months correlation between Nasdaq and Franklin is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of Nasdaq i.e., Nasdaq and Franklin New go up and down completely randomly.

Pair Corralation between Nasdaq and Franklin New

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Franklin New. In addition to that, Nasdaq is 4.59 times more volatile than Franklin New York. It trades about -0.26 of its total potential returns per unit of risk. Franklin New York is currently generating about -0.21 per unit of volatility. If you would invest  1,080  in Franklin New York on September 28, 2024 and sell it today you would lose (10.00) from holding Franklin New York or give up 0.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  Franklin New York

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Franklin New York

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nasdaq and Franklin New

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

The idea behind Nasdaq Inc and Franklin New York 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 Commodity Directory module to find actively traded commodities issued by global exchanges.