Correlation Between Franklin Income and Dimensional Retirement
Can any of the company-specific risk be diversified away by investing in both Franklin Income and Dimensional Retirement 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 Franklin Income and Dimensional Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Income Fund and Dimensional Retirement Income, you can compare the effects of market volatilities on Franklin Income and Dimensional Retirement 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 Franklin Income with a short position of Dimensional Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Income and Dimensional Retirement.
Diversification Opportunities for Franklin Income and Dimensional Retirement
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Dimensional is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Income Fund and Dimensional Retirement Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Retirement and Franklin Income 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 Franklin Income Fund are associated (or correlated) with Dimensional Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Retirement has no effect on the direction of Franklin Income i.e., Franklin Income and Dimensional Retirement go up and down completely randomly.
Pair Corralation between Franklin Income and Dimensional Retirement
Assuming the 90 days horizon Franklin Income Fund is expected to generate 1.31 times more return on investment than Dimensional Retirement. However, Franklin Income is 1.31 times more volatile than Dimensional Retirement Income. It trades about 0.13 of its potential returns per unit of risk. Dimensional Retirement Income is currently generating about 0.15 per unit of risk. If you would invest 246.00 in Franklin Income Fund on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Franklin Income Fund or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Franklin Income Fund vs. Dimensional Retirement Income
Performance |
| Timeline |
| Franklin Income |
| Dimensional Retirement |
Franklin Income and Dimensional Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Income and Dimensional Retirement
The main advantage of trading using opposite Franklin Income and Dimensional Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Income position performs unexpectedly, Dimensional Retirement 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 Dimensional Retirement will offset losses from the drop in Dimensional Retirement's long position.| Franklin Income vs. Dimensional Retirement Income | Franklin Income vs. Qs Moderate Growth | Franklin Income vs. Calvert Moderate Allocation | Franklin Income vs. Transamerica Cleartrack Retirement |
| Dimensional Retirement vs. Prudential High Yield | Dimensional Retirement vs. Msift High Yield | Dimensional Retirement vs. Calvert High Yield | Dimensional Retirement vs. Virtus High Yield |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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