Correlation Between Franklin Convertible and Fs Multi-strategy
Can any of the company-specific risk be diversified away by investing in both Franklin Convertible and Fs Multi-strategy 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 Convertible and Fs Multi-strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Vertible Securities and Fs Multi Strategy Alt, you can compare the effects of market volatilities on Franklin Convertible and Fs Multi-strategy 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 Convertible with a short position of Fs Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Convertible and Fs Multi-strategy.
Diversification Opportunities for Franklin Convertible and Fs Multi-strategy
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and FSMSX is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Fs Multi Strategy Alt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fs Multi Strategy and Franklin Convertible 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 Vertible Securities are associated (or correlated) with Fs Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fs Multi Strategy has no effect on the direction of Franklin Convertible i.e., Franklin Convertible and Fs Multi-strategy go up and down completely randomly.
Pair Corralation between Franklin Convertible and Fs Multi-strategy
Assuming the 90 days horizon Franklin Vertible Securities is expected to under-perform the Fs Multi-strategy. In addition to that, Franklin Convertible is 1.21 times more volatile than Fs Multi Strategy Alt. It trades about -0.34 of its total potential returns per unit of risk. Fs Multi Strategy Alt is currently generating about -0.19 per unit of volatility. If you would invest 1,143 in Fs Multi Strategy Alt on October 9, 2024 and sell it today you would lose (28.00) from holding Fs Multi Strategy Alt or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Vertible Securities vs. Fs Multi Strategy Alt
Performance |
| Timeline |
| Franklin Convertible |
| Fs Multi Strategy |
Franklin Convertible and Fs Multi-strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Convertible and Fs Multi-strategy
The main advantage of trading using opposite Franklin Convertible and Fs Multi-strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Convertible position performs unexpectedly, Fs Multi-strategy 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 Fs Multi-strategy will offset losses from the drop in Fs Multi-strategy's long position.The idea behind Franklin Vertible Securities and Fs Multi Strategy Alt pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Fs Multi-strategy vs. Fs Real Asset | Fs Multi-strategy vs. Fs Multi Strategy Alt | Fs Multi-strategy vs. Fs Real Asset | Fs Multi-strategy vs. Ridgeworth Seix Government |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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