Correlation Between Franklin Resources and Ace Global

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

By analyzing existing cross correlation between Franklin Resources and Ace Global Business, you can compare the effects of market volatilities on Franklin Resources and Ace Global 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 Ace Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Resources and Ace Global.

Diversification Opportunities for Franklin Resources and Ace Global

-0.82

Correlation Coefficient

Franklin Resources  Ace Global

Pay attention - limited upside

The 3 months correlation between Franklin and Ace is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and Ace Global Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Global Business 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 Ace Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Global Business has no effect on the direction of Franklin Resources i.e., Franklin Resources and Ace Global go up and down completely randomly.

Pair Corralation between Franklin Resources and Ace Global

Considering the 90-day investment horizon Franklin Resources is expected to under-perform the Ace Global. In addition to that, Franklin Resources is 2.65 times more volatile than Ace Global Business. It trades about -0.15 of its total potential returns per unit of risk. Ace Global Business is currently generating about -0.04 per unit of volatility. If you would invest  1,212  in Ace Global Business on March 15, 2024 and sell it today you would lose (9.00) from holding Ace Global Business or give up 0.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	42.86%
Values	Daily Returns

Franklin Resources  vs.  Ace Global Business

Franklin Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ace Global Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ace Global Business has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Ace Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Resources and Ace Global

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

The idea behind Franklin Resources and Ace Global Business 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.