Correlation Between Franklin Resources and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Franklin Resources and Alcoa Corp 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 Resources and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Resources and Alcoa Corp, you can compare the effects of market volatilities on Franklin Resources and Alcoa Corp 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 Resources with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Resources and Alcoa Corp.
Diversification Opportunities for Franklin Resources and Alcoa Corp
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Alcoa is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Franklin Resources 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 Resources are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Franklin Resources i.e., Franklin Resources and Alcoa Corp go up and down completely randomly.
Pair Corralation between Franklin Resources and Alcoa Corp
Considering the 90-day investment horizon Franklin Resources is expected to under-perform the Alcoa Corp. But the stock apears to be less risky and, when comparing its historical volatility, Franklin Resources is 1.84 times less risky than Alcoa Corp. The stock trades about -0.06 of its potential returns per unit of risk. The Alcoa Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,977 in Alcoa Corp on January 25, 2024 and sell it today you would earn a total of 629.00 from holding Alcoa Corp or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Franklin Resources vs. Alcoa Corp
Performance |
| Timeline |
| Franklin Resources |
| Alcoa Corp |
Franklin Resources and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Resources and Alcoa Corp
The main advantage of trading using opposite Franklin Resources and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Resources position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.| Franklin Resources vs. BlackRock | Franklin Resources vs. Main Street Capital | Franklin Resources vs. Blackstone Group | Franklin Resources vs. Ares Capital |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |