Correlation Between Franklin Resources, and Archer Daniels

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

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

Diversification Opportunities for Franklin Resources, and Archer Daniels

0.8

Correlation Coefficient

Franklin Resources,  Archer Daniels

Very poor diversification

The 3 months correlation between Franklin and Archer is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources, and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland and Franklin Resources, 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 Resources, are associated (or correlated) with Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Franklin Resources, i.e., Franklin Resources, and Archer Daniels go up and down completely randomly.

Pair Corralation between Franklin Resources, and Archer Daniels

Assuming the 90 days trading horizon Franklin Resources, is expected to generate 0.83 times more return on investment than Archer Daniels. However, Franklin Resources, is 1.2 times less risky than Archer Daniels. It trades about 0.29 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about 0.13 per unit of risk. If you would invest  10,520  in Franklin Resources, on April 25, 2025 and sell it today you would earn a total of  3,214  from holding Franklin Resources, or generate 30.55% return on investment over 90 days.

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

Franklin Resources,  vs.  Archer Daniels Midland

Franklin Resources,

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Resources, are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Franklin Resources, sustained solid returns over the last few months and may actually be approaching a breakup point.

Archer Daniels Midland

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Daniels Midland are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Archer Daniels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Resources, and Archer Daniels

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

The idea behind Franklin Resources, and Archer Daniels Midland 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.