Correlation Between Aig Government and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Aig Government and Franklin Mutual 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 Aig Government and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Franklin Mutual Global, you can compare the effects of market volatilities on Aig Government and Franklin Mutual 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 Aig Government with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Franklin Mutual.
Diversification Opportunities for Aig Government and Franklin Mutual
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aig and Franklin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global and Aig Government 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 Aig Government Money are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Aig Government i.e., Aig Government and Franklin Mutual go up and down completely randomly.
Pair Corralation between Aig Government and Franklin Mutual
Assuming the 90 days horizon Aig Government Money is expected to generate 0.33 times more return on investment than Franklin Mutual. However, Aig Government Money is 3.07 times less risky than Franklin Mutual. It trades about -0.01 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about -0.03 per unit of risk. If you would invest 1,019 in Aig Government Money on September 14, 2024 and sell it today you would lose (2.00) from holding Aig Government Money or give up 0.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Aig Government Money vs. Franklin Mutual Global
Performance |
Timeline |
Aig Government Money |
Franklin Mutual Global |
Aig Government and Franklin Mutual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aig Government and Franklin Mutual
The main advantage of trading using opposite Aig Government and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.Aig Government vs. Simt Multi Asset Accumulation | Aig Government vs. Saat Market Growth | Aig Government vs. Simt Real Return | Aig Government vs. Simt Small Cap |
Franklin Mutual vs. Alternative Asset Allocation | Franklin Mutual vs. T Rowe Price | Franklin Mutual vs. Enhanced Large Pany | Franklin Mutual vs. Fisher Large Cap |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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