Correlation Between Americafirst Large and Franklin Biotechnology

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

By analyzing existing cross correlation between Americafirst Large Cap and Franklin Biotechnology Discovery, you can compare the effects of market volatilities on Americafirst Large and Franklin Biotechnology 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 Americafirst Large with a short position of Franklin Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Franklin Biotechnology.

Diversification Opportunities for Americafirst Large and Franklin Biotechnology

-0.63

Correlation Coefficient

Americafirst Large  Franklin Biotechnology

Excellent diversification

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

Pair Corralation between Americafirst Large and Franklin Biotechnology

Assuming the 90 days horizon Americafirst Large Cap is expected to generate 0.61 times more return on investment than Franklin Biotechnology. However, Americafirst Large Cap is 1.65 times less risky than Franklin Biotechnology. It trades about 0.13 of its potential returns per unit of risk. Franklin Biotechnology Discovery is currently generating about -0.15 per unit of risk. If you would invest  1,327  in Americafirst Large Cap on September 20, 2024 and sell it today you would earn a total of  90.00  from holding Americafirst Large Cap or generate 6.78% return on investment over 90 days.

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

Americafirst Large Cap  vs.  Franklin Biotechnology Discove

Americafirst Large Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Large Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Franklin Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Biotechnology Discovery has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Americafirst Large and Franklin Biotechnology

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

The idea behind Americafirst Large Cap and Franklin Biotechnology Discovery 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.