Correlation Between AstraZeneca PLC and Franklin Income
Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC and Franklin Income 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 AstraZeneca PLC and Franklin Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC ADR and Franklin Income Fund, you can compare the effects of market volatilities on AstraZeneca PLC and Franklin Income 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 AstraZeneca PLC with a short position of Franklin Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Franklin Income.
Diversification Opportunities for AstraZeneca PLC and Franklin Income
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AstraZeneca and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC ADR and Franklin Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Me Fund and AstraZeneca PLC 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 AstraZeneca PLC ADR are associated (or correlated) with Franklin Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Me Fund has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Franklin Income go up and down completely randomly.
Pair Corralation between AstraZeneca PLC and Franklin Income
Considering the 90-day investment horizon AstraZeneca PLC ADR is expected to generate 2.49 times more return on investment than Franklin Income. However, AstraZeneca PLC is 2.49 times more volatile than Franklin Income Fund. It trades about 0.02 of its potential returns per unit of risk. Franklin Income Fund is currently generating about 0.02 per unit of risk. If you would invest 6,359 in AstraZeneca PLC ADR on January 19, 2024 and sell it today you would earn a total of 477.00 from holding AstraZeneca PLC ADR or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AstraZeneca PLC ADR vs. Franklin Income Fund
Performance |
| Timeline |
| AstraZeneca PLC ADR |
| Franklin Me Fund |
AstraZeneca PLC and Franklin Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstraZeneca PLC and Franklin Income
The main advantage of trading using opposite AstraZeneca PLC and Franklin Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC position performs unexpectedly, Franklin Income 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 Income will offset losses from the drop in Franklin Income's long position.The idea behind AstraZeneca PLC ADR and Franklin Income Fund 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.| Franklin Income vs. HUMANA INC | Franklin Income vs. Aquagold International | Franklin Income vs. Spring Valley Acquisition |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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