Correlation Between Triton International and Franklin Credit

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

By analyzing existing cross correlation between Triton International Limited and Franklin Credit Management, you can compare the effects of market volatilities on Triton International and Franklin Credit 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 Triton International with a short position of Franklin Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triton International and Franklin Credit.

Diversification Opportunities for Triton International and Franklin Credit

0.35

Correlation Coefficient

Triton International  Franklin Credit

Weak diversification

The 3 months correlation between Triton and Franklin is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and Franklin Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Credit Mana and Triton International 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 Triton International Limited are associated (or correlated) with Franklin Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Credit Mana has no effect on the direction of Triton International i.e., Triton International and Franklin Credit go up and down completely randomly.

Pair Corralation between Triton International and Franklin Credit

Assuming the 90 days trading horizon Triton International is expected to generate 73.74 times less return on investment than Franklin Credit. But when comparing it to its historical volatility, Triton International Limited is 20.48 times less risky than Franklin Credit. It trades about 0.02 of its potential returns per unit of risk. Franklin Credit Management is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Franklin Credit Management on December 30, 2024 and sell it today you would lose (1.00) from holding Franklin Credit Management or give up 9.09% of portfolio value over 90 days.

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

Triton International Limited  vs.  Franklin Credit Management

Triton International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Triton International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Franklin Credit Mana

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Credit Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Franklin Credit displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Triton International and Franklin Credit

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

The idea behind Triton International Limited and Franklin Credit Management 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 Channel module to use Commodity Channel Index to analyze current equity momentum.