Correlation Between Stellus Capital and Franklin Resources
Can any of the company-specific risk be diversified away by investing in both Stellus Capital and Franklin Resources 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 Stellus Capital and Franklin Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellus Capital Investment and Franklin Resources, you can compare the effects of market volatilities on Stellus Capital and Franklin Resources 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 Stellus Capital with a short position of Franklin Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellus Capital and Franklin Resources.
Diversification Opportunities for Stellus Capital and Franklin Resources
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stellus and Franklin is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Stellus Capital Investment and Franklin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Resources and Stellus Capital 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 Stellus Capital Investment are associated (or correlated) with Franklin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Resources has no effect on the direction of Stellus Capital i.e., Stellus Capital and Franklin Resources go up and down completely randomly.
Pair Corralation between Stellus Capital and Franklin Resources
Considering the 90-day investment horizon Stellus Capital Investment is expected to generate 0.67 times more return on investment than Franklin Resources. However, Stellus Capital Investment is 1.5 times less risky than Franklin Resources. It trades about 0.05 of its potential returns per unit of risk. Franklin Resources is currently generating about 0.01 per unit of risk. If you would invest 1,041 in Stellus Capital Investment on February 15, 2024 and sell it today you would earn a total of 380.00 from holding Stellus Capital Investment or generate 36.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
Stellus Capital Investment vs. Franklin Resources
Performance |
Timeline |
Stellus Capital Inve |
Franklin Resources |
Stellus Capital and Franklin Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stellus Capital and Franklin Resources
The main advantage of trading using opposite Stellus Capital and Franklin Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellus Capital position performs unexpectedly, Franklin Resources 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 Resources will offset losses from the drop in Franklin Resources' long position.Stellus Capital vs. PennantPark Floating Rate | Stellus Capital vs. Gladstone Capital | Stellus Capital vs. Gladstone Investment | Stellus Capital vs. Prospect Capital |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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