Correlation Between Auer Growth and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Auer Growth 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 Auer Growth and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auer Growth Fund and Franklin Mutual Beacon, you can compare the effects of market volatilities on Auer Growth 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 Auer Growth with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auer Growth and Franklin Mutual.
Diversification Opportunities for Auer Growth and Franklin Mutual
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auer and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Auer Growth Fund and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon and Auer Growth 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 Auer Growth 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 Beacon has no effect on the direction of Auer Growth i.e., Auer Growth and Franklin Mutual go up and down completely randomly.
Pair Corralation between Auer Growth and Franklin Mutual
Assuming the 90 days horizon Auer Growth Fund is expected to generate 1.4 times more return on investment than Franklin Mutual. However, Auer Growth is 1.4 times more volatile than Franklin Mutual Beacon. It trades about 0.08 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.08 per unit of risk. If you would invest 1,455 in Auer Growth Fund on September 3, 2024 and sell it today you would earn a total of 313.00 from holding Auer Growth Fund or generate 21.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auer Growth Fund vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Auer Growth Fund |
| Franklin Mutual Beacon |
Auer Growth and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auer Growth and Franklin Mutual
The main advantage of trading using opposite Auer Growth and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auer Growth 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.| Auer Growth vs. Lebenthal Lisanti Small | Auer Growth vs. Hodges Small Cap | Auer Growth vs. Schwartz Value Focused | Auer Growth vs. Oberweis Small Cap Opportunities |
| Franklin Mutual vs. Omni Small Cap Value | Franklin Mutual vs. Commonwealth Global Fund | Franklin Mutual vs. Auer Growth Fund | Franklin Mutual vs. Eic Value Fund |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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