Correlation Between Dodge International and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Dodge International 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 Dodge International and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge International Stock and Franklin Mutual European, you can compare the effects of market volatilities on Dodge International 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 Dodge International with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge International and Franklin Mutual.
Diversification Opportunities for Dodge International and Franklin Mutual
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and Franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock 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 Dodge International 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 Dodge International Stock 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 Dodge International i.e., Dodge International and Franklin Mutual go up and down completely randomly.
Pair Corralation between Dodge International and Franklin Mutual
Assuming the 90 days horizon Dodge International Stock is expected to generate about the same return on investment as Franklin Mutual European. However, Dodge International is 1.05 times more volatile than Franklin Mutual European. It trades about 0.05 of its potential returns per unit of risk. Franklin Mutual European is currently producing about 0.06 per unit of risk. If you would invest 2,048 in Franklin Mutual European on September 4, 2024 and sell it today you would earn a total of 480.00 from holding Franklin Mutual European or generate 23.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge International Stock vs. Franklin Mutual European
Performance |
| Timeline |
| Dodge International Stock |
| Franklin Mutual European |
Dodge International and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge International and Franklin Mutual
The main advantage of trading using opposite Dodge International and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge International 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.| Dodge International vs. Dodge Stock Fund | Dodge International vs. Dodge Income Fund | Dodge International vs. Dodge Balanced Fund | Dodge International vs. The Fairholme Fund |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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