Correlation Between Segall Bryant and Franklin Natural

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

By analyzing existing cross correlation between Segall Bryant Hamill and Franklin Natural Resources, you can compare the effects of market volatilities on Segall Bryant and Franklin Natural 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 Segall Bryant with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Segall Bryant and Franklin Natural.

Diversification Opportunities for Segall Bryant and Franklin Natural

0.45

Correlation Coefficient

Segall Bryant  Franklin Natural

Very weak diversification

The 3 months correlation between Segall and Franklin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Segall Bryant Hamill and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Segall Bryant 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 Segall Bryant Hamill are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Segall Bryant i.e., Segall Bryant and Franklin Natural go up and down completely randomly.

Pair Corralation between Segall Bryant and Franklin Natural

Assuming the 90 days horizon Segall Bryant is expected to generate 15.49 times less return on investment than Franklin Natural. But when comparing it to its historical volatility, Segall Bryant Hamill is 1.05 times less risky than Franklin Natural. It trades about 0.01 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,975  in Franklin Natural Resources on September 4, 2024 and sell it today you would earn a total of  202.00  from holding Franklin Natural Resources or generate 6.79% return on investment over 90 days.

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

Segall Bryant Hamill  vs.  Franklin Natural Resources

Segall Bryant Hamill

Risk-Adjusted Performance

0 of 100

Very Weak

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

Franklin Natural Res

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Natural Resources are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Franklin Natural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Segall Bryant and Franklin Natural

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

The idea behind Segall Bryant Hamill and Franklin Natural Resources 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.