Correlation Between SCOR PK and Franklin Strategic

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Can any of the company-specific risk be diversified away by investing in both SCOR PK and Franklin Strategic 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 SCOR PK and Franklin Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Franklin Strategic Mortgage, you can compare the effects of market volatilities on SCOR PK and Franklin Strategic 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 SCOR PK with a short position of Franklin Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Franklin Strategic.

Diversification Opportunities for SCOR PK and Franklin Strategic

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between SCOR and Franklin is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and FRANKLIN STRATEGIC MORTGAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic and SCOR PK 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 SCOR PK are associated (or correlated) with Franklin Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic has no effect on the direction of SCOR PK i.e., SCOR PK and Franklin Strategic go up and down completely randomly.

Pair Corralation between SCOR PK and Franklin Strategic

Assuming the 90 days horizon SCOR PK is expected to generate 7.41 times more return on investment than Franklin Strategic. However, SCOR PK is 7.41 times more volatile than Franklin Strategic Mortgage. It trades about 0.16 of its potential returns per unit of risk. Franklin Strategic Mortgage is currently generating about 0.21 per unit of risk. If you would invest  301.00  in SCOR PK on December 29, 2023 and sell it today you would earn a total of  26.00  from holding SCOR PK or generate 8.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SCOR PK  vs.  FRANKLIN STRATEGIC MORTGAGE

 Performance 
       Timeline  
SCOR PK 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, SCOR PK showed solid returns over the last few months and may actually be approaching a breakup point.
Franklin Strategic 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Franklin Strategic Mortgage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Franklin Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SCOR PK and Franklin Strategic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SCOR PK and Franklin Strategic

The main advantage of trading using opposite SCOR PK and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Franklin Strategic 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 Strategic will offset losses from the drop in Franklin Strategic's long position.
The idea behind SCOR PK and Franklin Strategic Mortgage 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.
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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