Correlation Between Income Fund and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Income Fund and Franklin Growth 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 Income Fund and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Fund Of and Franklin Growth Opportunities, you can compare the effects of market volatilities on Income Fund and Franklin Growth 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 Income Fund with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and Franklin Growth.
Diversification Opportunities for Income Fund and Franklin Growth
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Income and Franklin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo and Income Fund 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 Income Fund Of are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Oppo has no effect on the direction of Income Fund i.e., Income Fund and Franklin Growth go up and down completely randomly.
Pair Corralation between Income Fund and Franklin Growth
Assuming the 90 days horizon Income Fund Of is expected to under-perform the Franklin Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Income Fund Of is 2.43 times less risky than Franklin Growth. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Franklin Growth Opportunities is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6,380 in Franklin Growth Opportunities on September 12, 2024 and sell it today you would lose (13.00) from holding Franklin Growth Opportunities or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Fund Of vs. Franklin Growth Opportunities
Performance |
| Timeline |
| Income Fund |
| Franklin Growth Oppo |
Income Fund and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Fund and Franklin Growth
The main advantage of trading using opposite Income Fund and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Income Fund vs. Delaware Limited Term Diversified | Income Fund vs. Pioneer Diversified High | Income Fund vs. Small Cap Stock | Income Fund vs. Oppenheimer International Diversified |
| Franklin Growth vs. American Funds The | Franklin Growth vs. American Funds The | Franklin Growth vs. Growth Fund Of | Franklin Growth vs. Growth Fund Of |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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