Correlation Between Emerald Insights and Franklin Vertible

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

By analyzing existing cross correlation between Emerald Insights Fund and Franklin Vertible Securities, you can compare the effects of market volatilities on Emerald Insights and Franklin Vertible 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 Emerald Insights with a short position of Franklin Vertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Insights and Franklin Vertible.

Diversification Opportunities for Emerald Insights and Franklin Vertible

0.91

Correlation Coefficient

Emerald Insights  Franklin Vertible

Almost no diversification

The 3 months correlation between Emerald and Franklin is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Insights Fund and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Vertible and Emerald Insights 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 Emerald Insights Fund are associated (or correlated) with Franklin Vertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Vertible has no effect on the direction of Emerald Insights i.e., Emerald Insights and Franklin Vertible go up and down completely randomly.

Pair Corralation between Emerald Insights and Franklin Vertible

Assuming the 90 days horizon Emerald Insights Fund is expected to generate 1.73 times more return on investment than Franklin Vertible. However, Emerald Insights is 1.73 times more volatile than Franklin Vertible Securities. It trades about 0.03 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about -0.34 per unit of risk. If you would invest  2,155  in Emerald Insights Fund on September 27, 2024 and sell it today you would earn a total of  16.00  from holding Emerald Insights Fund or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Emerald Insights Fund  vs.  Franklin Vertible Securities

Emerald Insights

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Insights Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Emerald Insights may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Franklin Vertible

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Vertible Securities are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Vertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerald Insights and Franklin Vertible

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

The idea behind Emerald Insights Fund and Franklin Vertible Securities 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.