Correlation Between American Mutual and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both American Mutual 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 American Mutual and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Mutual Fund and Franklin Mutual Global, you can compare the effects of market volatilities on American Mutual 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 American Mutual with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Franklin Mutual.
Diversification Opportunities for American Mutual and Franklin Mutual
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Franklin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global and American Mutual 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 American Mutual Fund 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 Global has no effect on the direction of American Mutual i.e., American Mutual and Franklin Mutual go up and down completely randomly.
Pair Corralation between American Mutual and Franklin Mutual
Assuming the 90 days horizon American Mutual Fund is expected to under-perform the Franklin Mutual. In addition to that, American Mutual is 1.18 times more volatile than Franklin Mutual Global. It trades about -0.07 of its total potential returns per unit of risk. Franklin Mutual Global is currently generating about 0.12 per unit of volatility. If you would invest 3,144 in Franklin Mutual Global on September 13, 2024 and sell it today you would earn a total of 30.00 from holding Franklin Mutual Global or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Franklin Mutual Global
Performance |
| Timeline |
| American Mutual |
| Franklin Mutual Global |
American Mutual and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Franklin Mutual
The main advantage of trading using opposite American Mutual and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual 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.| American Mutual vs. New Perspective Fund | American Mutual vs. New World Fund | American Mutual vs. Washington Mutual Investors | American Mutual vs. Aquagold International |
| Franklin Mutual vs. Ab Small Cap | Franklin Mutual vs. Cardinal Small Cap | Franklin Mutual vs. Pace Smallmedium Value | Franklin Mutual vs. Vy Columbia Small |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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