Correlation Between BlackRock Health and Franklin Universal

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

By analyzing existing cross correlation between BlackRock Health Sciences and Franklin Universal Closed, you can compare the effects of market volatilities on BlackRock Health and Franklin Universal 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 BlackRock Health with a short position of Franklin Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Health and Franklin Universal.

Diversification Opportunities for BlackRock Health and Franklin Universal

-0.63

Correlation Coefficient

BlackRock Health  Franklin Universal

Excellent diversification

The 3 months correlation between BlackRock and Franklin is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Health Sciences and Franklin Universal Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Universal Closed and BlackRock Health 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 BlackRock Health Sciences are associated (or correlated) with Franklin Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Universal Closed has no effect on the direction of BlackRock Health i.e., BlackRock Health and Franklin Universal go up and down completely randomly.

Pair Corralation between BlackRock Health and Franklin Universal

Considering the 90-day investment horizon BlackRock Health Sciences is expected to under-perform the Franklin Universal. In addition to that, BlackRock Health is 1.18 times more volatile than Franklin Universal Closed. It trades about -0.13 of its total potential returns per unit of risk. Franklin Universal Closed is currently generating about 0.13 per unit of volatility. If you would invest  729.00  in Franklin Universal Closed on September 13, 2024 and sell it today you would earn a total of  36.00  from holding Franklin Universal Closed or generate 4.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BlackRock Health Sciences  vs.  Franklin Universal Closed

BlackRock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, BlackRock Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Franklin Universal Closed

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Universal Closed are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Franklin Universal is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BlackRock Health and Franklin Universal

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

The idea behind BlackRock Health Sciences and Franklin Universal Closed 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.