Correlation Between Crossmark Steward and Franklin Equity

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

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

Diversification Opportunities for Crossmark Steward and Franklin Equity

0.55

Correlation Coefficient

Crossmark Steward  Franklin Equity

Very weak diversification

The 3 months correlation between Crossmark and Franklin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Crossmark Steward Equity and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity Income and Crossmark Steward 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 Crossmark Steward Equity are associated (or correlated) with Franklin Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Crossmark Steward i.e., Crossmark Steward and Franklin Equity go up and down completely randomly.

Pair Corralation between Crossmark Steward and Franklin Equity

Assuming the 90 days horizon Crossmark Steward is expected to generate 1.89 times less return on investment than Franklin Equity. But when comparing it to its historical volatility, Crossmark Steward Equity is 1.42 times less risky than Franklin Equity. It trades about 0.03 of its potential returns per unit of risk. Franklin Equity Income is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,749  in Franklin Equity Income on October 11, 2024 and sell it today you would earn a total of  404.00  from holding Franklin Equity Income or generate 14.7% return on investment over 90 days.

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

Crossmark Steward Equity  vs.  Franklin Equity Income

Crossmark Steward Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Franklin Equity Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Equity Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Crossmark Steward and Franklin Equity

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

The idea behind Crossmark Steward Equity and Franklin Equity Income 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.