Correlation Between Traditions Bank and Franklin Financial

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

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

Diversification Opportunities for Traditions Bank and Franklin Financial

0.0

Correlation Coefficient

Traditions Bank  Franklin Financial

Pay attention - limited upside

The 3 months correlation between Traditions and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Traditions Bank and Franklin Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Financial and Traditions Bank 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 Traditions Bank are associated (or correlated) with Franklin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Financial has no effect on the direction of Traditions Bank i.e., Traditions Bank and Franklin Financial go up and down completely randomly.

Pair Corralation between Traditions Bank and Franklin Financial

If you would invest  2,933  in Franklin Financial Services on December 2, 2024 and sell it today you would earn a total of  836.00  from holding Franklin Financial Services or generate 28.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Traditions Bank  vs.  Franklin Financial Services

Traditions Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Traditions Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Traditions Bank is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Franklin Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Financial Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Franklin Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Traditions Bank and Franklin Financial

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

The idea behind Traditions Bank and Franklin Financial Services 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.