Correlation Between One Choice and Franklin Servative

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

By analyzing existing cross correlation between One Choice Portfolio and Franklin Servative Allocation, you can compare the effects of market volatilities on One Choice and Franklin Servative 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 One Choice with a short position of Franklin Servative. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Choice and Franklin Servative.

Diversification Opportunities for One Choice and Franklin Servative

0.93

Correlation Coefficient

One Choice  Franklin Servative

Almost no diversification

The 3 months correlation between One and Franklin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding One Choice Portfolio and Franklin Servative Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Servative and One Choice 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 One Choice Portfolio are associated (or correlated) with Franklin Servative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Servative has no effect on the direction of One Choice i.e., One Choice and Franklin Servative go up and down completely randomly.

Pair Corralation between One Choice and Franklin Servative

Assuming the 90 days horizon One Choice Portfolio is expected to under-perform the Franklin Servative. But the mutual fund apears to be less risky and, when comparing its historical volatility, One Choice Portfolio is 1.29 times less risky than Franklin Servative. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Franklin Servative Allocation is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,429  in Franklin Servative Allocation on September 24, 2024 and sell it today you would lose (22.00) from holding Franklin Servative Allocation or give up 1.54% of portfolio value over 90 days.

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

One Choice Portfolio  vs.  Franklin Servative Allocation

One Choice Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Franklin Servative

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with One Choice and Franklin Servative

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

The idea behind One Choice Portfolio and Franklin Servative Allocation 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.