Correlation Between Franklin Natural and Ivy Natural

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

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

Diversification Opportunities for Franklin Natural and Ivy Natural

0.99

Correlation Coefficient

Franklin Natural  Ivy Natural

No risk reduction

The 3 months correlation between Franklin and Ivy is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Ivy Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Natural Resources and Franklin Natural 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 Natural Resources are associated (or correlated) with Ivy Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Natural Resources has no effect on the direction of Franklin Natural i.e., Franklin Natural and Ivy Natural go up and down completely randomly.

Pair Corralation between Franklin Natural and Ivy Natural

Assuming the 90 days horizon Franklin Natural is expected to generate 1.16 times less return on investment than Ivy Natural. But when comparing it to its historical volatility, Franklin Natural Resources is 1.1 times less risky than Ivy Natural. It trades about 0.18 of its potential returns per unit of risk. Ivy Natural Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,473  in Ivy Natural Resources on May 7, 2025 and sell it today you would earn a total of  153.00  from holding Ivy Natural Resources or generate 10.39% return on investment over 90 days.

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

Franklin Natural Resources  vs.  Ivy Natural Resources

Franklin Natural Res

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Natural Resources are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Franklin Natural may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Ivy Natural Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Natural Resources are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ivy Natural may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Franklin Natural and Ivy Natural

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

The idea behind Franklin Natural Resources and Ivy Natural Resources 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.