Correlation Between Franklin Natural and Alger Spectra
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Alger Spectra 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 Franklin Natural and Alger Spectra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Natural Resources and Alger Spectra, you can compare the effects of market volatilities on Franklin Natural and Alger Spectra 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 Franklin Natural with a short position of Alger Spectra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Alger Spectra.
Diversification Opportunities for Franklin Natural and Alger Spectra
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Alger is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Alger Spectra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Spectra and Franklin Natural 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 Franklin Natural Resources are associated (or correlated) with Alger Spectra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Spectra has no effect on the direction of Franklin Natural i.e., Franklin Natural and Alger Spectra go up and down completely randomly.
Pair Corralation between Franklin Natural and Alger Spectra
Assuming the 90 days horizon Franklin Natural is expected to generate 1.22 times less return on investment than Alger Spectra. But when comparing it to its historical volatility, Franklin Natural Resources is 1.39 times less risky than Alger Spectra. It trades about 0.23 of its potential returns per unit of risk. Alger Spectra is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,233 in Alger Spectra on June 1, 2025 and sell it today you would earn a total of 472.00 from holding Alger Spectra or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Franklin Natural Resources vs. Alger Spectra
Performance |
| Timeline |
| Franklin Natural Res |
| Alger Spectra |
Franklin Natural and Alger Spectra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Alger Spectra
The main advantage of trading using opposite Franklin Natural and Alger Spectra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Alger Spectra 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 Alger Spectra will offset losses from the drop in Alger Spectra's long position.| Franklin Natural vs. Morningstar Defensive Bond | Franklin Natural vs. California Municipal Portfolio | Franklin Natural vs. Ambrus Core Bond | Franklin Natural vs. Artisan High Income |
| Alger Spectra vs. Deutsche Multi Asset Moderate | Alger Spectra vs. Tiaa Cref Lifestyle Moderate | Alger Spectra vs. Moderate Balanced Allocation | Alger Spectra vs. Multimanager Lifestyle Moderate |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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