Correlation Between Adams Diversified and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Adams Diversified 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 Adams Diversified and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Diversified Equity and Franklin Mutual European, you can compare the effects of market volatilities on Adams Diversified 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 Adams Diversified with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Diversified and Franklin Mutual.
Diversification Opportunities for Adams Diversified and Franklin Mutual
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adams and Franklin is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Adams Diversified Equity and Franklin Mutual European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual European and Adams Diversified 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 Adams Diversified Equity 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 European has no effect on the direction of Adams Diversified i.e., Adams Diversified and Franklin Mutual go up and down completely randomly.
Pair Corralation between Adams Diversified and Franklin Mutual
Considering the 90-day investment horizon Adams Diversified Equity is expected to generate 1.1 times more return on investment than Franklin Mutual. However, Adams Diversified is 1.1 times more volatile than Franklin Mutual European. It trades about 0.12 of its potential returns per unit of risk. Franklin Mutual European is currently generating about 0.05 per unit of risk. If you would invest 1,250 in Adams Diversified Equity on September 4, 2024 and sell it today you would earn a total of 818.00 from holding Adams Diversified Equity or generate 65.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Diversified Equity vs. Franklin Mutual European
Performance |
| Timeline |
| Adams Diversified Equity |
| Franklin Mutual European |
Adams Diversified and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Diversified and Franklin Mutual
The main advantage of trading using opposite Adams Diversified and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Diversified 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.| Adams Diversified vs. Tri Continental Closed | Adams Diversified vs. SRH Total Return | Adams Diversified vs. Putnam Municipal Opportunities | Adams Diversified vs. Tortoise Energy Independence |
| Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Mutual Global |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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