Correlation Between Franklin Exponential and Franklin Disruptive

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

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

Diversification Opportunities for Franklin Exponential and Franklin Disruptive

0.83

Correlation Coefficient

Franklin Exponential  Franklin Disruptive

Very poor diversification

The 3 months correlation between Franklin and Franklin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Exponential Data and Franklin Disruptive Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Disruptive and Franklin Exponential 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 Franklin Exponential Data are associated (or correlated) with Franklin Disruptive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Disruptive has no effect on the direction of Franklin Exponential i.e., Franklin Exponential and Franklin Disruptive go up and down completely randomly.

Pair Corralation between Franklin Exponential and Franklin Disruptive

Given the investment horizon of 90 days Franklin Exponential is expected to generate 1.17 times less return on investment than Franklin Disruptive. In addition to that, Franklin Exponential is 1.26 times more volatile than Franklin Disruptive Commerce. It trades about 0.2 of its total potential returns per unit of risk. Franklin Disruptive Commerce is currently generating about 0.3 per unit of volatility. If you would invest  3,312  in Franklin Disruptive Commerce on September 15, 2024 and sell it today you would earn a total of  610.00  from holding Franklin Disruptive Commerce or generate 18.42% return on investment over 90 days.

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

Franklin Exponential Data  vs.  Franklin Disruptive Commerce

Franklin Exponential Data

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Exponential Data are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Franklin Exponential unveiled solid returns over the last few months and may actually be approaching a breakup point.

Franklin Disruptive

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Disruptive Commerce are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Franklin Disruptive showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Exponential and Franklin Disruptive

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

The idea behind Franklin Exponential Data and Franklin Disruptive Commerce 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.