Correlation Between Franklin International and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Franklin International and Hon Hai 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 International and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin International Core and Hon Hai Precision, you can compare the effects of market volatilities on Franklin International and Hon Hai 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 International with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin International and Hon Hai.
Diversification Opportunities for Franklin International and Hon Hai
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Hon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin International Core and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision and Franklin 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 Franklin International Core are associated (or correlated) with Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of Franklin International i.e., Franklin International and Hon Hai go up and down completely randomly.
Pair Corralation between Franklin International and Hon Hai
Given the investment horizon of 90 days Franklin International is expected to generate 17.47 times less return on investment than Hon Hai. But when comparing it to its historical volatility, Franklin International Core is 3.86 times less risky than Hon Hai. It trades about 0.06 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 642.00 in Hon Hai Precision on January 26, 2024 and sell it today you would earn a total of 303.00 from holding Hon Hai Precision or generate 47.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin International Core vs. Hon Hai Precision
Performance |
| Timeline |
| Franklin International |
| Hon Hai Precision |
Franklin International and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin International and Hon Hai
The main advantage of trading using opposite Franklin International and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin International position performs unexpectedly, Hon Hai 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 Hon Hai will offset losses from the drop in Hon Hai's long position.| Franklin International vs. SPDR MSCI Emerging | Franklin International vs. SPDR MSCI USA | Franklin International vs. SPDR MSCI World | Franklin International vs. SPDR SSGA Large |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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