Correlation Between Franklin Dynatech and Victory Sycamore

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

By analyzing existing cross correlation between Franklin Dynatech Fund and Victory Sycamore Established, you can compare the effects of market volatilities on Franklin Dynatech and Victory Sycamore 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 Dynatech with a short position of Victory Sycamore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Dynatech and Victory Sycamore.

Diversification Opportunities for Franklin Dynatech and Victory Sycamore

0.82

Correlation Coefficient

Franklin Dynatech  Victory Sycamore

Very poor diversification

The 3 months correlation between Franklin and Victory is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Dynatech Fund and Victory Sycamore Established in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Sycamore Est and Franklin Dynatech 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 Dynatech Fund are associated (or correlated) with Victory Sycamore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Sycamore Est has no effect on the direction of Franklin Dynatech i.e., Franklin Dynatech and Victory Sycamore go up and down completely randomly.

Pair Corralation between Franklin Dynatech and Victory Sycamore

Assuming the 90 days horizon Franklin Dynatech Fund is expected to under-perform the Victory Sycamore. In addition to that, Franklin Dynatech is 1.87 times more volatile than Victory Sycamore Established. It trades about -0.11 of its total potential returns per unit of risk. Victory Sycamore Established is currently generating about -0.2 per unit of volatility. If you would invest  5,018  in Victory Sycamore Established on January 31, 2024 and sell it today you would lose (155.00) from holding Victory Sycamore Established or give up 3.09% of portfolio value over 90 days.

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

Franklin Dynatech Fund  vs.  Victory Sycamore Established

Franklin Dynatech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Dynatech Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Franklin Dynatech may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Victory Sycamore Est

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Sycamore Established are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Victory Sycamore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Dynatech and Victory Sycamore

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

The idea behind Franklin Dynatech Fund and Victory Sycamore Established 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.