Correlation Between Emerald Banking and Franklin Mutual

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

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

Diversification Opportunities for Emerald Banking and Franklin Mutual

0.68

Correlation Coefficient

Emerald Banking  Franklin Mutual

Poor diversification

The 3 months correlation between Emerald and Franklin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Banking And and Franklin Mutual Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Financial and Emerald Banking 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 Banking And are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Financial has no effect on the direction of Emerald Banking i.e., Emerald Banking and Franklin Mutual go up and down completely randomly.

Pair Corralation between Emerald Banking and Franklin Mutual

If you would invest  2,092  in Emerald Banking And on September 5, 2024 and sell it today you would earn a total of  341.00  from holding Emerald Banking And or generate 16.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Emerald Banking And  vs.  Franklin Mutual Financial

Emerald Banking And

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Banking And are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Emerald Banking showed solid returns over the last few months and may actually be approaching a breakup point.

Franklin Mutual Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Mutual Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Franklin Mutual 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 Banking and Franklin Mutual

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

The idea behind Emerald Banking And and Franklin Mutual Financial 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.