Correlation Between Franklin Convertible and Large Cap
Can any of the company-specific risk be diversified away by investing in both Franklin Convertible and Large Cap 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 Large Cap 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 Large Cap Growth Profund, you can compare the effects of market volatilities on Franklin Convertible and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Convertible and Large Cap.
Diversification Opportunities for Franklin Convertible and Large Cap
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Large is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Franklin Convertible i.e., Franklin Convertible and Large Cap go up and down completely randomly.
Pair Corralation between Franklin Convertible and Large Cap
Assuming the 90 days horizon Franklin Convertible is expected to generate 3.2 times less return on investment than Large Cap. But when comparing it to its historical volatility, Franklin Vertible Securities is 1.89 times less risky than Large Cap. It trades about 0.06 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,794 in Large Cap Growth Profund on October 11, 2024 and sell it today you would earn a total of 1,886 from holding Large Cap Growth Profund or generate 67.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Vertible Securities vs. Large Cap Growth Profund
Performance |
| Timeline |
| Franklin Convertible |
| Large Cap Growth |
Franklin Convertible and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Convertible and Large Cap
The main advantage of trading using opposite Franklin Convertible and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Convertible position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Franklin Convertible vs. 1919 Financial Services | Franklin Convertible vs. Fidelity Advisor Financial | Franklin Convertible vs. Icon Financial Fund | Franklin Convertible vs. Angel Oak Financial |
| Large Cap vs. Fidelity Vertible Securities | Large Cap vs. Victory Incore Investment | Large Cap vs. Absolute Convertible Arbitrage | Large Cap vs. Franklin Vertible Securities |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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