Correlation Between Amcap Fund and Franklin High
Can any of the company-specific risk be diversified away by investing in both Amcap Fund and Franklin High 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 Amcap Fund and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amcap Fund Class and Franklin High Yield, you can compare the effects of market volatilities on Amcap Fund and Franklin High 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 Amcap Fund with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and Franklin High.
Diversification Opportunities for Amcap Fund and Franklin High
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amcap and Franklin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and Amcap 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 Amcap Fund Class are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Amcap Fund i.e., Amcap Fund and Franklin High go up and down completely randomly.
Pair Corralation between Amcap Fund and Franklin High
Assuming the 90 days horizon Amcap Fund is expected to generate 1.32 times less return on investment than Franklin High. In addition to that, Amcap Fund is 3.86 times more volatile than Franklin High Yield. It trades about 0.02 of its total potential returns per unit of risk. Franklin High Yield is currently generating about 0.08 per unit of volatility. If you would invest 876.00 in Franklin High Yield on December 4, 2024 and sell it today you would earn a total of 47.00 from holding Franklin High Yield or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Amcap Fund Class vs. Franklin High Yield
Performance |
| Timeline |
| Amcap Fund Class |
| Franklin High Yield |
Amcap Fund and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amcap Fund and Franklin High
The main advantage of trading using opposite Amcap Fund and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Amcap Fund vs. Precious Metals And | Amcap Fund vs. Wells Fargo Advantage | Amcap Fund vs. The Gold Bullion | Amcap Fund vs. International Investors Gold |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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